$100 Oil

January 2008 brought $100 per barrel oil. Local newspapers are full of expert predictions about what this means for the world economy, US drivers and airline tickets. Almost nobody has observed that oil is priced in $US. That means the decline in the value of our dollar has added to this price rise. Look at some comparisons with 9/10/2001 – a date our President said things changed.

On 9/10/2001 the price of oil was $27.63 a barrel. That was equivalent to Euros 30.40 a barrel. On 9/10/2001 one US dollar bought 1.10 Euros. Today, our dollar only buys 0.68 Euros. Today, January 7, 2008, a barrel of oil costs $97.91, equivalent to 66.60 Euros.

Since 9/10/2001, oil prices have increased 219 percent if you are French and are paid in Euros. For an American paying in US dollars the price has increased by 354 percent. But, 135 percent of that dollar increase is simply because our currency is worth less. The blame for that part of the increase does not sit with the oil companies, Saudi Arabia or Venezuela. It lies in Washington! (The blame for some other premiums that we all pay might also belong in Washington - but that is a different subject.)

Not everyone here is unhappy with $100 oil. In south Texas it has brought a revival to many old oil fields owned by individuals or small companies. It has also brought new subjects to photograph. I’ve watched the activity in an old field near my home with great interest. Abandoned pump jacks like the one above are being replaced by new machines as high oil prices make this field profitable again. I took the photograph below on an Easter Sunday. That day, the light breaking through the dark clouds and new machines where all was forsaken made me think of re-birth and the Resurrection.

What is the future for this old field? I think that $100 per barrel oil brings with it the seeds of its own destruction. I will not be surprised to see oil prices decline in 2008 as poorer people around the world are forced to cut demand. Maybe December 2008 will see prices closer to $60 per barrel than $100. If that happens then this field will probably decline again; an unlikely victim of our free market economy.