There are several factors, not just one.
1) In 1986 OPEC flooded the market with oil in an attempt to kill foreign oil companies and eliminate their competition. This caused oil to fall from $45/bbl to $9/bbl in a week. OPEC continued to produce oil at max production throughout the 1990';s. The average price of oil did not rise with inflation for a decade. We get used to artificially cheap oil.
2) By the early 2000's, the rise of the Chinese and Indian economies, and the steady growth of all other economies, caused a sharp increase in the global demand for oil. At the same time, conventional oil reservoirs (the stuff that is easy to find and cheap to produce) are depleting exponentially. Global supply could not keep up with the rise in demand.
3) Someone on wall street discovered that they could by oil contracts, hold on to it for a few months and then sell the contract for a profit. Everyone caught on and wall street began doing this like it was going out of style. Geopolitical events caused them to speculate that the supply of oil would decrease and that the price of oil would rise. They would then by large amounts of oil at a premium. Since they were paying premiums, they were preferentially sold oil over all other competitors such as refineries. This is taking away world supply, artificially driving up prices.
4) Oil companies now have to focus on un-conventional reservoirs such as gas shales, oil shales, tar sands, heavy oils, coal-bed methane, and over-pressured reservoirs. They have to go deeper, and develop new technologies to produce these types of reservoirs that were not possible 8 years ago. New technologies and more extreme reservoirs are far more expensive to drill and produce. The average cost of an offshore oil rig is about 1 billion dollars. To rent one to drill a single well is $200,000 per day whether you are drilling or not (mind you it take about 60 days to drill a single well). The cost of exploration is more expensive, and not economic at current prices.
This is all supply and demand. For prices to stabilize, demand must be reduced through conservation and alternative energy sources. At the same time, oil supply must increase and stabilize.How did oil become a problem in the first place ?
Oil became a problem when people started to realize when you burn in you release a heck of a lot of carbon dioxide into the atmosphere which is causing our planet to heat up faster than it can handle. Also because it is scarce and not a renewable resource, so when it is gone it is gone. They should've drilled in Alaska ten years ago. The arctic is believed to have a lot of oil. They should've started to get ready to dig that out a decade ago. Most of the countries we buy oil from don't really like us that much it seems like.
There is no problem. There is plenty of oil in the world. It's a problem for the Jewish lobby because they think oil is making Arabs rich, and they are jealous. They would rather see all Arabs poor and at the mercy of Israel and the US.
Oil became a problem when the oil companies figured out they could charge more if there was a problem with oil AND the science dudes figured out they could make billions of dollars if they found away for us to run out of oil !
Money Money Money !
since the model T.
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