Are current oil prices indicative of “peak oil” or a bubble?
A2: The world is not running out of energy or oil anytime soon. Energy resources, when measured as “molecules” in the ground—including conventional and unconventional fuels and the ability to convert them to liquid fuels—are indeed enormous. But heightened and sustained “above ground” risks—such as access and security to transport, investment, and environmental concerns—may restrict their production. Rising demand will continue to place extraordinary burdens on producers. Conventional approaches to calculating oil prices cannot explain current prices or the rapid increases seen over the past few years. Some analysts see similarities between current oil markets and previous investment bubbles, but there is no clear indication of when or how far prices will recede. Q3: What about retail gasoline prices? A3: Crude oil costs are the largest single component of gasoline prices. At full pass through, every dollar increase in crude translates into 2.4 cents per gallon at the pump. In addition
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