Peak Oil -
Oil, Gas & Energy Stock Prices

Unstable Oil Prices in 2008

Oil prices reached a record high in May of 2008, as we all know when we went to fill up our vehicles and gasped at four dollar plus prices per gallon of gasoline. While all of America know of the outcome and results of the economy's pre-plummet gain, how many Americans, or for that matter, how many people in the world, even know what caused it?

Although the outcome can be traced to several factors, possibly even into the hundreds, I'm going to try and focus on the most direct causes. It's important to keep in mind that this price hike, and abrupt fall, was not caused by a natural oil shortage, per se. It's more or less a man-made shortage, an attempt by middle east to cause the United States to fumble and lose it's place as a world power.

1. A weak U.S. Dollar, leading up to the economic collapse.
2. The middle east and OPEC attempting to price gouge
3. Russia's attempt to create their own oil regulatory organization
4. World Instability
5. Our reliance on oil, both as a fuel and as an economic commodity

While it must be noted that our reliance on oil was a major contributing factor to this problem, it isn't just that we rely on it to get to work or mow our lawns. It's that it is, or rather was, a major back bone in our economy.

The average barrel of crude would change hands, and ownership, and estimated 7-9 times before it even reached a refinery. And the worst part is, the only people we can blame for this is ourselves. It's our own economy that essentially doomed us, as our economy grew, so did the price of oil.

One could theoretically compare oil to gold, it's a globally recognized commodity that every developed nation depends upon, every nation trades, and every nation consumes. To be brutally honest, it would seem as if oil was the true king of the world so to speak.

Ultimately, the price of oil dropped because of a sharp decline in consumption in the United States and elsewhere in the world. However, we are still feeling the economic aftermath of the spike and fall. The price of oil is slowly rising again, as of this writing (October 2009), prices are around $75 per drum, while not as high as it was in 2008, it's definitely a climb over the $40 a barrel price we opened the year with.