Kevin Drum reports on a new study by the International Energy Agency (IEA) that suggest a much higher price of oil in the very near future.
Why?
In the past the IEA has studied and predicted demand for oil and simply assumed that supply will keep up with demand. Now they have also looked carefully at supply and realized that it is no longer keeping up with demand and that currently planned explorations can't change that. The result? They suggest that a shortage of supply "by 2015 of as much as 12.5 million barrels a day, unless there was a sharp drop in expected demand."
If that's the case, then $4 a gallon for gas and $135 per barrel for oil is literally nothing. Goldman Sachs is predicting $200 per barrel next year. At the anticipated prices a shortage of 12.5 million barrels a day will cause, gasoline will become a luxury good available only the the very wealthy, the military and some government agencies. No more selling 15,000,000 cars a year in the U.S. as is expected this year.
Kevin based his report on this article from the Wall Street Journal.
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