Oil dropped to $98/bbl Friday after jobs news indicated a serious drop in demand. Of course, this is temporary. Sometime this weekend, oil producing nations will casually announce cuts to production for critical maintenance which just happens to correspond to driving up the price back to the $100+ range once more. Like every other time before this. The oil industry is comfortable with crude over $100/bbl, regardless of what it does to the world economy. After all, the more oil in the ground, the longer the more it is worth, the more time to construct sufficient deterrents from their own slaughter by increasingly angry underclass, such as that in Saudi Arabia who literally get their food as a gift from the wealthy who control the oil. No oil, no money, no food, civil war/massacre results. As far as OPEC is concerned, the longer they can delay this the better. If that means driving the rest of the western world, whom they despise, into the worlds worst depression since the Dark Ages, it's all good!

So yeah, the price will snap back up on Monday as the stock market takes a hit over the employment numbers and falls further. The drop today of 168 points wasn't that bad. Its the jobs market stupid. This is why govt needs to get out of governing. They're just not good at it.

Gasoline in California is down to $4.17/gal cheap stuff, cheapest price. Why? The DJIA fell 1.00% on news that The Fed would devaluate the Dollar more by buying assets (this is commonly called "borrowing from Peter to pay Paul"). It is worth pointing out that the NIKKEI and TOPIX (asian stock exchanges) have fallen 1.47% in trading so far today, in response to the drop on the DOW.

Also, people have been asking me about the oil pipeline under construction from WTI Cushing, Oklahoma, into Galveston, Texas, and how that's going to fix our gasoline prices. It won't. Its already been stated by the companies involved and the govt that the refineries will be exporting fuel to other countries so we'll actually be paying MORE for fuel, not less. If the refineries are smart, they'll dump some gasoline on the market to drop the price temporarily til the election is over.

Why isn't oil spiking up faster? We all know that sooner or later Israel will strike Iran or another big hurricane will blow through the Gulf of Mexico. So come on, let's get this show on the road already.

Remember "Who Killed the Electric Car?"? This is the followup, which includes the Tesla, Leaf, Volt, and some guy in LA building his from scratch. Interesting interviews with the men behind the new cars. It is worth noting that the Leaf is actually being sold to people in Portland for real world use as a test market. It is a shame that the Lithium Ion batteries used in each of them is actually a rare earth element, and only enough for about 2 million vehicles exists. This makes an electric car a thing only rich people own, and driving one is a suicidal act, once the gasoline runs out. If there's a gap between the end of fossil fuels and scaling up synthetic biodiesel from algae, then driving one becomes a life-taking risk. This is why I keep seeing scooters as the answer. We're going to have to accept, at some point, that taking a trip somewhere is a risk, and we might die. We enjoyed easy motoring for decades, with convenience and safety. This was a temporary thing... like retirement, affordable health care, chocolate, bananas, and Fiji water. Let it go. Be a man and let it go.

The story title is:

Oil Prices Will `Pierce' $147, Schoenberger Says

The link leads to a video of a couple different guys being interviewed on oil price trends. One says it will pass $147 because we can't live without it. Another says we're already too pricey and says collapse in economic activity will cut demand, dropping the price. I think they forget that OPEC can easily cut production to drive the price where they want it.

It is interesting to see them finally get around to talking about what we've been discussing for the last 7 years. I think it is poignant that they clearly don't know what to do, and that they're no longer kidding themselves that govt will help, or that they can realistically "profit" from this.

There seems to be a growing consensus among the populous that in fact, the world is awash in plentiful oil, and that the high prices stem solely from the actions of "the speculators" and "wall street".

In virtually any news story coming out about oil, the highest rated comments will invariable go something like the following - a real example from a news story posted on Yahoo this morning.

"Thanks to the 2000 Commodities Futures Modernization Act we will soon be paying $5 a gallon based on Wall Street speculation that will continue to make banks and oil companies billions of dollars, despite the fact we have an over supply of oil and less demand for oil. Get ready America we are about to get screwed once again. REPEAL THE BILL and take oil off of the commodities market"

As of right now this comment has 233 likes, 10 dislikes and 35 replies. Almost all of the replies are in agreement, with only 2 dissenting voices bringing up geologic factors and peak oil.

As we get further into peak oil, and the prices keep rising, I foresee this chorus of angry blame growing in magnitude. When the prices get high enough, say near $5 a gallon for any sustained length of time, there could possibly be rioting. The ranks of Occupy Wall Street will surely swell in number, and perhaps they will actually break into the New York Stock Exchange and torch it to the ground. But of course, after they destroy "the speculators" the prices will stay high and keep rising. Who then will they find to blame for the high prices? The oil companies? OPEC?

How long before they point the finger where it belongs, at themselves for driving monstrous SUVs and pick-up trucks all these years.

I'm kind of amazed that oil has reached this level despite every indicator suggesting Greece is weeks from collapse/default and the EU ending abruptly in pints of bitter to celebrate the failure of decades of effort at unification. I can't blame them a second pint, but watching the price spike quietly, sans response ou comment, I find myself sadly cognizant of the reality imposed.

A few weeks ago I was all set to invest in an Italian scooter with proven ability on very rough roads. Then the economy worsened and I tightened my belt rather than spend money on something that its nation of origin implies a definite lack of available spare parts, particularly in the face of the implied reissue of the Lire, much as the Greeks will reissue the Drachma. With the Euro failure being largely inevitable (a terrible but accurate word in this case), you just can't ignore the potential consequences of unintended consequences. The industry I work in is going to lose 60% of its business, best case. Even if the competition fails and my own company gets a dose of sanity and offloads a lot of parasites, we're still in for a tough time. Lower wages, no benefits, lower prices to beat the competition, and a high turnover rate since nobody goes to college to be poor while getting cancer on the job. For the rest of you, how do you feel about 90% unemployment rates?

I really hope you like commuter bicycles. Some are very nice to ride, avoid punctures and deal with the harsh bumps that real world roads deliver. Oil prices are going to keep rising to deal with devaluating dollars, so $140/bbl is coming soon. At some point the Arab oil states are going to stop pretending that allying with the USA matters at all. Enjoy.