What will you be doing when oil hits $100/barrel?

What will you be doing when oil hits $100/barrel? Do you think that at that price biofuels will become viable?

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3 Responses to What will you be doing when oil hits $100/barrel?

  1. Doris de Guzman 8 November, 2007 at 10:43 pm #

    Hi Simon,
    According to a November 5 NBC news report, certain parts in California Bay Area are seeing biodiesel retail price at 20-40 cents below diesel.

    http://www.nbc11.com/news/14514807/detail.html?subid=10111094

    Several news reports are already hinting on $4/gal gasoline in the coming US holidays, which could bode well for ethanol.

    Personally, I don’t drive and I don’t own my place so heating oil and fuel is not really a big concern in my wallet. However, my recent utility bill (includes gas charge and electricity) stated an increase of 18% starting this month and I am now reviewing my shopping options and Christmas gifts….

  2. Biofuelsimon 9 November, 2007 at 3:29 pm #

    Our fuel bills have leaped in the UK, and we are beginging to realise that there is little gas left in the North Sea and that we are along way from Russian Gas fields. Will it be enough to get people using biogas in the UK, I doubt that there’s enough capactity…

    It’s the thought that counts not the size of the gift…

  3. Mark C R UK 14 November, 2007 at 10:10 am #

    Yes but on the Natural gas issue – we have earlier in the year just opened a Norway-UK gas pipeline that caused the natural gas price to plumet in the UK. Not sure on how long these fields are rated for supply, or how much market share they make up but they did bring down the wholesale price and the watchdogs were critical of the suppliers for lagging behind in bringing down consumer bills in the UK.

    The whole UK PLC policy is for diversity… it’s the sensible bet, but sometimes at odds with local level (grass roots) policy in my opinion, particuarly on tax.

    As far as I’m aware the recent surge in Oil (over and above recent trends) is due to the “credit-crunch” and instability in the financial markets?
    Simple example: Currency traders funds have jumped out of that market due to uncertainty in the US dollar and have gone into “safe” commodities almost like a holding pattern until “le credit crunch”‘s effects become more clear. For example I read:
    Gold is (currently) at around $800per tonne and oil is close to $100 a barrel since these are percieved as “safe” investments. i.e. Speculators have entered the market place……. and with the tight market we have anyway, this has caused the recent price jump.

    These are huge economic issues… way way beyond the biofuels sector.

    So whats the outlook (as a non-economist, I’m a chemist but like to know whats happening in the wider area)… well this is beneficial is it not to biofuels?
    Example: Biofuel companies can help blue-chip companies involved in logisitical-transport networks “lock in their profit margin” (insulate them from big increases in oil prices [assuming sensible macro-economic policies from governments are utilised: have to question the UK governments stance here in regard to tax...). There is the simple idea of "supply-demand" in the market with high oil prices.... The result is money will flow into the biofuels market and therefore fund R&D to improve efficiencies. Thereby driving further growth. (again dependent on wider macroeconomic policy).

    Maybe it's time we came up with a price/metric/indicator that indicates oil prices and biofuels prices relative to economic growth and inflation (biofuels have positive/negative effects on inflation by the way! as just briefly mentioned above - which is under a great deal of debate e.g. food v fuel, or reduced cost of transportation in high oil price environment).

    as I write oil is at $91 USD, either way - when oil hits $100 a barrel which probably won't be long (December time? US holiday season?) and depending on other developments....

    Which way the wind is blowing is something I wouldn't like to say. I certainly think for biofuels high oil prices are not too bad a thing (dependent on the actual biofuel talked about). If the actual supply is there is something I doubt outside a nieche area of the fuels market.

    *[either way paying £1.04 BPS per liter for unleaded petrol/gasoline at the pump is something I'm not too happy with...]

    It’s a case of like most economists watch and see what happens see how people/markets react to the psychologically important $100 USD barrier…

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