Oil barrels through record prices

Note: I'm not going to be posting long blogs from now on, just going to get straight to the point - that's the new format

People keep complaining about record Oil prices - the pain at the pump. The question many people ask is whether the prices are sustainable.

Irregardless of the record demand from Overseas, high prices have had a direct impact on demand. Gas stations have shut down outright. Less cars are on the road - there's no doubt about it.

Innovation will spring from these prices, and will help further curtail the demand for fuel in the future. Clearly, the days in which every other car on the road is an SUV is over. There's a glut of these vehicles on the market - and no one's buying them.

In addition, utilities have started to plan for new nuclear units. People have to drop their reservations about the technology, its safe and it's extremely cheap to operate on a kWh basis - to build, however, it costs 3x that of a Coal fired plant. Alternative fuel sources are also now being used, with increased reliance on Coal and Natural Gas (NG has spiked as a result).

But back to the issue of Nuclear Energy - if we were to take into account the ill fated Shoreham Nuclear Plant on Long Island that was shuttered immediately after achieving commercial operation, you would find that it would have provided 1,000 MW of Capacity - 20% of Long Island Peak Demand, and 40% of its average electricity usage. This 1,000 MW unit would have saved at minimum 14 Million barrels of oil on an equivalent BTU basis, and thus far would have saved 287 Million barrels of oil to date. If you were to multiply that times the current oil prices you'd find that the plant would've saved $1.7 Billion this year alone in fuel costs. The case for nuclear is becoming increasingly clear.

Will Oil remain at these prices? There's a strong possibility. The only way to reduce the price of oil is to restore value to the US Currency. As I've illustrated in previous posts, it has slid almost 45% in value from 2003 when compared to other foreign currencies. While Europe may have seen Oil Prices increase 200%, we've seen them go up 350%. If our currency has higher purchasing power, the increased prices are essentially offset to other foreign countries - so instead of seeing Gas prices at $4, they should be at $2.70 a gallon if our currency had held its value.