Oil Prices: The decades of cheap prices are over

"Don't put all your eggs into one basket!"

In the early 1940s, with the world at war, oil prices likely fluctuated, but I can find no record of price per barrel (ppb). The earliest posted crude prices at Illinois Basin are from March 31, 1946 and ppb was $1.37.

$1.37. You and I can’t get a decent cup of coffee today for that price. But 65 years ago one could buy a barrel of oil and have enough change left over from a two-spot to get a haircut, grab a burger, watch a movie, and take a bus ride home.

According to Illinois Basin, it wasn’t until Dec. 1973 that average monthly oil ppb past the $5 mark. However, to some manufacturers, dependent upon cheap oil prices to turn a decent profit, the overall average in the decade of the ‘70s - in the $6.50 - $6.99 range - must have seemed ungodly.

Things got a lot worse in the 1980s.

“Events in Iran and Iraq led to another round of crude oil price increases in 1979 and 1980.  The Iranian revolution resulted in the loss of 2 to 2.5 million barrels of oil (mbpd) per day between November of 1978 and June of 1979.  In 1980 Iraq's crude oil production fell 2.7 mbpd and Iran's production by 600,000 barrels per day during the Iran/Iraq War.  The combination of these two events resulted in crude oil prices more than doubling from $14 in 1978 to $35 per barrel in 1981.” (HISTORY OF ILLINOIS BASIN POSTED CRUDE OIL PRICES)

Thank goodness oil prices settled down later in the 1980s, thereby bringing the 1980s average ppb down around $21 - $22.

Though various factors have affected the price of oil from the 1980s to today, the trend has, for the most part, been upward.

E.g., 1990s - $15.70 ave. ppb. (a relatively cheap decade)

2000s - $46.00 ave. ppb. (2008 saw unusually high prices, with 5 months posting averages above $100 pb)

The current decade is on course to beat all records of the past. The 2010 average ppb was $71.21, up 35% from 2000s average. And the 2011 average ppb (for the first 9 months) was $87.48, up 47% from 2000s average.

Today you can buy a barrel of oil for $106.10, and though our wages have increased substantially since the $1.37 ppb in the 1940s, only the rich can afford the increases to the cost of living we are seeing today and will see in the future as oil prices continue to rise.

Though all nations should have been promoting conservation of resources and preparing plans to transition away from an oil-based lifestyle in the 1970s, most promoted larger lifestyles instead. Even today, Canada’s Prime Minister chief goal is to keep the oil-based fires burning under our economy by selling as much tarsands oil as possible to Asia and other countries.

With the decades of cheap oil prices over, and with prices now doubling and tripling before our eyes, conservation efforts related to fuel must double and triple as well. Public education related to the need for smaller houses and cars, reduced spending, paying down debt and saving for tougher times ahead must come ahead of selling more oil at all costs.

To those who think, at $106 per barrel, Canada will make a fortune, I say, some will make a fortune, but most will not.

Most will wonder what tomorrow will bring other than higher oil prices and a lower standard of living.

[Cartoon by G. Harrison]

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Please click here for more about oil prices.

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My Morning Rant: “Hyping oil now will lead to harping down the line”

[“Given the state of the EU, it needs all the economic help from Alberta and Canada it can get, including decently priced petroleum that doesn’t come from a country where they chop people’s heads off every Friday afternoon.” Feb. 25, The London Free Press, in an editorial borrowed from the Edmonton Sun]

I think it’s safe to say, you know your country is in economic and environmental trouble when it has to hype its tarsands oil projects to make a buck.

About the hype: It isn’t just in the news in the city and province rich in toxic tarsand, i.e., Edmonton, Alberta. It’s here in oil-depleted Ontario, and across Canada.

And thanks to the dogged determination of our Prime Minister, the hype has reached China’s and Europe’s shores and several other countries around the globe, particularly countries that still have money and economic wheels to grease.

Enough with the hype.

Surely most of us instantly recognize that “decently priced petroleum” is a gross exaggeration. A quick peek at oil prices over the last century reveal a steep upward climb in the last three decades, especially since 2005. However one wishes to paint the portrait of oil prices - in acrylic, water colour or oil - I predict it won’t end well.


[Please click to view details - History of crude prices]


That being said, however, as supplies of easy oil dwindle in more apparent fashion and the price per barrel of crude continues its steady march past $100 toward $200, the ‘Made in Canada’ hype will perhaps grow less desperate, as China and a few other major buyers ink deals for long-term, oil-based economic security (if there is such a thing, when we consider so few countries have a back-up plan). Then the PM will perhaps be able to sit down, relax a bit, unpack his suitcase and take his kids to a hockey game.

Unfortunately though, after the time of hyping, the time of harping will no doubt begin in earnest.

More to follow.

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Please click here to read more about oil.

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2,012 Challenges in Modern Times: “Let’s flaunt our clean oil image?”

[“It’s a good start toward reversing the push by the zealous but grievously under-informed environmental lobby to stop oilsands bitumen production.” Feb. 25, London Free Press]

Word is spreading. Coal is the dirtiest fuel on the planet, and it’s so dirty that some people now want people across the globe to believe that tarsands oil is squeaky clean by comparison.

Cigarettes don’t kill people, proclaimed tobacco producers and cigarette manufacturers not too many years ago. And their bogus claims ruled for decades while lung cancer and respiratory illnesses shortened and ended lives around the globe.

DDT is great for killing weeds, proclaimed chemical producers in the 1940s and ‘50s, as post-war agriculture boomed. And their claims about DDT’s benefits and their accompanying silence concerning its ill-effects resounded for decades while the land, lakes, rivers and streams, and upper atmosphere stored its poison for future generations to deal with.

The list goes on, and today the common man must deal with headlines in local papers that read ‘(It’s) Time for Alberta to flaunt its new, ‘clean’ image’ and accompanying articles that hold out good news concerning the multi-billion dollar oil industry on the one hand, and hold out no information on the other about the industry’s ill affects upon the land water and atmosphere, as if to say ‘it’s all good, all the time’.

In other words, the truth about the oil-industry comes up half-empty, and business-as-usual becomes the order of the day. About the environmental lobby being “under-informed” (as reported by the Edmonton Sun in the Free Press article): It’s no wonder the lobby and the rest of Canada doesn’t know everything about the oil industry, especially the harm done. It is never fully reported for common consumption!

And that is but one challenge of many to deal with in modern times. (We’re really not so modern as we think, are we).

In my opinion, to combat the ‘oil is good, business-as-usual' approach to life, we must adopt the following principles:

Reduce spending

Pay down debt

Save money for tough times ahead

Replace shopping skills with social and survival skills

Consume less, commune more with others and nature.

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Please click here to read more 2,012 Challenges

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The price of oil and the century-old cheap ride

The screech of brakes outside my house often sends me scurrying to the porch. The four-way stop at a nearby corner is often the cause of the smell of burnt rubber and worn brake linings that greets my nose.

Unfortunately, there is no worrisome screech of brakes as the global economy quickly slows as a result of rising oil prices. A loud screech might actually wake some of us up to the fact that we’re entering tough times.

Thanks to meticulous book-keeping records re oil prices, we know that we’ve been on a wonderfully cheap ride for at least 110 years. From 1865 to about 1975 the price of a barrel of oil was under $5. Now it costs, on average, 20 - 30 times as much and continual increases in price per barrel are likely for the next several decades.


[Please click here for more oil facts and figures]

While the family wallet expanded in many places around the world, particularly in Canada, USA, Europe and some oil-producing nations, and material goods went from experimental (early automobiles) to exciting (the first colour TVs) to excessive (remember the Hummer?), generations of people learned - what seemed to be inevitable truths for many - several adages:

hard work will lead to prosperity

economies will grow annually and forever

bigger is better

Earth’s resources belong to industry

a free market economy is the way up

and sustainability... not so much

... and so on. (Please, chip in your own ideas about other lessons learned during the era of cheap oil).

Today the price of oil stands at $99.81 and our Canadian Prime Minister is in China trying very hard to keep our resource-based economy alive (by, in large part, selling tar sands oil to Asia), thereby keeping Canada’s petro-dollar, healthy lifestyle and dreams afloat.

Since oil is so integral to our economy’s success, i.e., here in Canada, the nature of the line that represents the price of oil on the graph above seems to me to suggest what our future holds. In fact, I would predict violent shifts and ups and downs in our economy, uncertainty related to prospects for jobs and wealth, increases in costs for food, clothing, shelter, transportation, communication and recreation, and higher prices in almost every other area of life that we’ve slowly grown used to since the 1860s.

Though I don’t think we’ll hear the actual screech of brakes, we’ll continually feel, as if we’re riding in an aging car, a significant difference in the ride over the next few decades.

We’ll certainly hear many howls of discontent, e.g., from those who have grown used to many privileges, creature comforts and material goods over the last many decades of growth). We’ll hear more abrasive and often short-sighted calls for deep cuts in public spending, especially from those who think only the public sector is at fault and that the private sector has no need to sacrifice more for the sake of others around us who will need support in these tough times and more ahead.

Over the next number of years, as we transition from an “oil-based, economy first” society to a more sustainable one, I look forward to hearing admissions from Canadians from coast to coast that less is actually more, that by living small one is able to live more fully in intellectual, social, emotional, spiritual ways, etc.


[“Live small, get out of the LIVE BIG clamp”]

Truthfully, someone is bound to learn in the next year or so that they are actually a slave to their house or car and other material goods, and the ‘must-have’ lifestyle and associated debt is giving them stomach indigestion!

A loud screech might be needed for others, and it will come.

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Please click here for more about ‘live small and prosper.’

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Climate Change Concerns: Canada’s cold voice sends a chill

[“The Conservatives want to play alone in their oilsands box.” Interim NDP leader N. Turmel, Dec. 6, London Free Press]

Thirty-five per cent of Canadians will be delighted that Peter Kent, former news reporter and now Canada’s Federal Environment Minister, delivered in full Prime Minister Stephen Harper’s climate change policy at the climate conference in Durban, South Africa.

The majority of Canadians, not delighted, felt the chill in Kent’s steady, practiced voice as he read the following, like just another nightly news report, thus confirming Canada will not be a supporter of a second Kyoto Protocol:

“We believe that ultimately a new agreement that includes all of the world’s major emitters (of greenhouse gases) in both the developing and the developed world is the only way to materially reduce annual mega-tonnage to the point we can work to prevent global warming hitting or exceeding two degrees.” (Dec. 6, London Free Press)

After he spoke, he likely placed Harper’s neatly typed memo, or ‘policy’ to some, back inside his briefcase and sat down in his still-warm chair to a smattering of applause from other long time high-emitters of greenhouse gases, e.g., Japan, Russia and the US of A.

The upshot of such a stance will undoubtedly result in continued extensive emissions worldwide, as the developed countries (who have emitted most of the CO2 found in the atmosphere today, or who have had the highest emissions per capita for so long in order to live in big houses and drive luxury cars, e.g., the US, Japan, Germany, Russia, Canada) preach the message that “cleanliness is next to godliness, so get your emissions under control” to the developing countries that have attempted, for a relatively short period of time, to develop a richer, western-style lifestyle of their own.

Of course, Canada’s Conservative Prime Minister Harper already anticipated as much (his cold, terse memo to Kent’s audience in Durban would have no other major result), and will now bask in the realization that his plans to masterfully develop the environmentally toxic tar sands will continue unimpeded for many years, strengthening Canada’s petro-dollar and the illusion that unsustainable practices are good for Canada and then the world.


In order to keep the Canadian reputation as world-class thinker from slipping entirely from view on the world stage, Kent later added that ‘Canada would continue to pursue a modest target of reducing greenhouse gas emissions by 17 per cent from 2005 levels by 2020.’

Translation, for those who can’t understand Canadian Conservatives: “It’s the very least we can do, so we’ll do it.”

Kent also announced ‘Canada would increase its funding to $600 million a year for the next two years to help developing economies adapt to global warming in the future.’

Surely, a few sharp minds in Durban saw some irony in PM Harper’s decision to raise the amount of ‘hush money’ from $400 to $600 million.

The western tar sands are generating more income for the Conservative government along with higher levels of toxic emissions in the land, air and water in Alberta and beyond, so Canada is now better able to afford to help developing countries adapt to the fearful consequences of global warming.

In my opinion, after Environment Minister Kent closed his briefcase in Durban, he stepped off the world stage perhaps for the last time.

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Please click here for more Climate Change Concerns.

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PT 2 It’s “Another Saturday Night” and I ain’t got no money

[“Though some recent news reports ‘more that half of Canadians say they are making good progress paying down their debt’ (Aug. 9, London Free Press), the progress may not be enough to help them stay afloat.” Aug. 15, G. Harrison]

Sing it with me:

When you're weary, feeling small
When tears are in your eyes,

I will dry them all.

I'm on your side
When times get rough
And friends just can't be found,

Like a bridge over troubled water 
I will lay me down
Like a bridge over troubled water 
I will lay me down.
(P. Simon, 1969)

I think Paul Simon’s song will come to mind often in the near future when troubled waters on the horizon swamp the fragile boat many have boarded by taking on a lifestyle bigger than their weekly pay cheque can afford.

Journalist and author Gwynne Dyer addresses actual water woes - linked to financial problems I touched on in PT 1 - that are building up behind a weakening dam in his most recent column ‘Food supply depends on water supply’ and we should all take note.

[Please click here to link to Dyer’s article.]

Financial problems will likely sink many families soon, but water and subsequent food troubles will sink whole countries.


Dyer mentions more than water and food bubbles that will one day burst. He says, “There is the Chinese real-estate bubble, the biggest in history, which may take the whole world economy down with it when it bursts.” But then he adds, ominously, “But nothing compares with the food bubble.”

Okay, my interest was piqued.

Some highlights follow:

the average world price of grain soared by 71% in the last year

it’s a catastrophe for poor countries, not a catastrophe for some in rich countries who spend 10% or less of income on food supplies

climate change and water constraints will eventually make the situation more serious

water and food bubbles envelop and will affect everyone and their wallets and purses negatively

Some readers may be old enough to recall a food price crisis in the early 1970s and that “the problem was quickly solved by the famous Green Revolution, which hugely increased yields of rice, wheat and corn.”

And today some might be lulled into thinking that for every problem there will be a technological solution, so why worry.

There are drawbacks to that kind of thinking.

About the earlier food price crisis Dyer says, “The only drawback was that the Green Revolution wasn’t really all that green. Higher-yielding strains of familiar crops played a part in the solution, certainly, but so did a vastly increased use of fertilizer: global fertilizer use tripled between 1960 and 1975.”

Dyer perhaps assumes we know that depending on vast amounts of fertilizer is very short-sighted so goes on to his main point - future water shortages and food crises. But many don’t think about fertilizer, especially when roast beef is on sale at $2.99 per pound.

Here are a few highlights about fertilizer from ‘The Omnivore’s Dilemma by Michael Pollan:

“When humankind acquired the power to fix nitrogen (and thereby produce fertilizer), the basis of soil fertility shifted from a total reliance on the energy of the sun to a new reliance on fossil fuel.” (pg. 44)

“...synthetic fertilizer opens the way to monoculture, allowing the farmer to bring the factory’s economies of scale and efficiency to nature... fixing nitrogen allowed the food chain to turn from the logic of biology and embrace the logic of industry. Instead of eating exclusively from the sun, humanity now began to sip petroleum.” (pg. 45)

“When you add together the natural gas in the fertilizer to the fossil fuels it takes to make the pesticides, drive the tractors, and harvest, dry, and transport the corn (more than half of all synthetic nitrogen made today is applied to corn), you find that every bushel of industrial corn requires the equivalent of between a quarter and a third of a gallon of oil to grow it - or around fifty gallons of oil per acre of corn. (Some estimates are higher.)”

“Put another way, it takes more than a calorie of fossil fuel energy to produce a calorie of food... ecologically this is a fabulously expensive way to produce food (especially for beef @ $2.99 per pound) - but ‘ecologically’ is no longer the operative standard. As long as fossil fuel energy is so cheap and available, it makes good economic sense to produce corn (and many other foods) this way.”

Fertilizer. Fossil fuels. Food. The interconnection in modern times is guaranteed. The cheap price of food is not. As long as we rely on factory scale farms where production is driven by oil, the price of oil will determine the price of food.

Today, with the price per barrel at $86.05 (a real deal when compared to the price of $105 just a few months ago), and nations around the world scrambling to find new sources in more hard to reach places, the price of food will only go up.

Then there’s Dyer’s water issues.

More to follow.

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Please click here to read PT 1 It’s “Another Saturday Night” and I ain’t got no money.

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It Strikes Me Funny: It’s not like we don’t know

We know - we have for quite some time - US national debt is going North.

(It will surpass $15 Trillion this year).


We know Canadian debt is going North.

(It will surpass $600 Billion this year).

We know personal debt is going North.

(Canadian per capita debt is now at $150 per $100 income for the first time).

All these things we know.

What we don’t know - this strikes me funny - is what to do about it.

We know the days of $15 oil (price per barrel), as in the early 1980s, are over.

We know oil prices have increased four-fold in the last ten years alone.


We know global oil consumption has grown steadily since 1984.

We know global oil consumption, as from 1996 - 2006, cannot be sustained.

1996 - 71,669,000 barrels, a 2.19% rise over 1995
2006 - 84,977,000 barrels, a 1.16% rise over 2005
(Source: United States Energy Information Administration)

We know the oil bubble will burst, that it may have an unstoppable leak already.

These things we know.

What we don’t know - and this also strikes me funny - is what to do about it.


I’d recommend, just off the top of my head, long distance training.

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Please click here to read a series related to US debt.

How exciting is that!

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The Oil Barrel: We will do a lot of things differently

The toast popped up, hot to the touch (yup, I touched it - I live my life on the edge), I grabbed my favourite buttering knife, and slapped a layer of margarine over each waiting surface.

And as I did so, as is often the case, I remembered back to the days when preparing a highly nutritious breakfast wasn't quite so easy.

Travel back with me, if you dare, to 1955 and to the kitchen of the lovely wee home I lived in at that time.

"Gordon, get the Blue Bonnet margarine out of the fridge, okay?" said my mother.

"Sure, mom, I'd be happy to do that for you," I replied.

(If my mother was alive she would stare in disbelief at the above line. I usually had to be reminded several times to pay attention and heavily bribed to do even the simplest task).


I went to the fridge, pulled out the new box of margarine, opened it and withdrew a one pound packet of white margarine.

I flipped over the plastic packet and reached toward the brown gel button (it looked like a big belly button in the middle of a white tummy) and gave it a squeeze between a finger and thumb. It popped, released the liquid colouring agent, and I began rolling and squeezing the white olio and liquid together for several minutes until they mixed thoroughly to become "just the right shade of yellow" Blue Bonnet margarine.

With my duties done for the day, I ran outside in my pajamas and climbed a tree and started throwing eggs at passersby and my neighbour's dog. Or something like that. My memories are foggy. It was 1955, after all.

The old margarine squeezing scenario is forever gone because now margarine comes in plastic tubs and some machine has already done the mixing for us. We're so used to it being done for us that if any of us had to squeeze a gel pak and roll our own marg we'd probably moan and groan and write a letter to the editor of the nearest paper to say how tough life is. For sure, kids would look at their mother's as if she had horns and run outside in their pjs (do kids wear pajamas today?) and egg something. Egging would almost be an automatic response.

However, because oil consumption and prices have risen together steadily for almost 30 years and all aspects of life are getting more expensive - while I sit here and talk about gel buttons - we may all be doing a lot of things differently some day soon.

In fact, I think we already are and may not know it.

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Please click here to read more from the Oil Barrel.

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Oil Barrel: Oil prices rise right before our eyes

Many people likely saw this coming.

“Filling up your car, taking a trip, even buying groceries could get considerably more expensive as oil continues its climb toward $100 US a barrel. Today’s crude oil prices hover around $90 US a barrel, up from an average $79 in 2010.”

So began an article in the Jan. 24 issue of The London Free Press.

Surprised? Not likely, if you’ve been watching the price of oil rise steadily over the last ten years.

For those that haven’t, below is a list of the average price per barrel in US dollars for the years 2001 to 2010.

2001 - $24.30
2002 - $25
2003 - $29
2004 - $38
2005 - $53
2006 - $64
2007 - $71
*2008 - $97
2009 - $62
2010 - $79


(*2008 was a horrendous year, oil-wise, as you may recall. Average monthly prices rose to $110 or more for 5 months (over $130 for two months) and the year’s average ended at $97).

Though today’s crude oil prices hover around $90 US a barrel ($91.91 at price of oil.org) and a trunkload of groceries may soon cost more than we like, we should have seen this coming a mile off.

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Are you prepared for higher oil prices?

More of the Oil Barrel here.

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Bits and Pieces: So, if I owned a pellet gun...

I’d be half way to a pot of Brunswick or Squirrel Stew.

I’ve never tasted squirrel (I hear it tastes like rabbit. I enjoyed rabbit many times as a kid.) but, because several squirrels have formed a commando group and continually raid my bird feeders, I’m motivated to try.


[“Squirrel meat on sale in England. Yummy?”: photo link]

Because of the trend toward higher energy prices (related to oil, gas and coal costs), perhaps we should expand our tastes to include local squirrel meat.


[“Tasty Squirrel Pie”: photo link]

Would you try it?


[“Is it leaner than bison? It looks good.”: photo link]

What if beef prices double? Would you be more interested to try it once?

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Rising oil costs have us over a barrel.

How far away are higher food costs and a taste of Squirrel Pie?

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Oil Barrel: Climate change and oil consumption concerns

In an earlier Oil Barrel post I mentioned the following lines from an online article:

“We are on the path to climate chaos, Big Oil has admitted.

“Both BP and Exxon have conceded that progress on climate change is totally insufficient to stabilize CO2 emissions.”

Though Big Oil is aware of climate chaos ahead, don’t expect members of the Big Oil league to work too hard toward climate change solutions. They’re busy.


And of course, in an oil-based, consumption-centered world (“Bigger is better, ain’t it?”), one shouldn’t expect progress related to climate change and carbon emissions until oil consumptions declines.

Currently, however, our global record on that front appears to be set in concrete.

Since 1984 (after a few years of decline), global consumption of oil has grown steadily each year for which I was able to find records, or for over two decades and until 2006.

E.g., Year 1984
Oil consumption, thousands of barrels per day - 57186.54 (or 57.2 million barrels)
Increase from previous year - 1.96 %

2005
Consumption - 84002.86 thousand or 84 million barrels
Increase - 1.94 % (The jump from 1984 to 2005 is huge!)

2006
Consumption - 84977.35 thousand or 84 million barrels
Increase - 1.16 %

[Source: United States Energy Information Administration]

I assume the growth has continued since 2006, along with carbon emissions and climate change concerns.

Though I'm not proud to say it, Canada - my home country -and the US are front and center when consumption records are considered.

According to Wikipedia, the free encyclopedia, “The United States is the largest energy consumer in terms of total use, using 100 quadrillion BTUs (105 exajoules, or 29 PWh) in 2005.

“This is three times the consumption by the United States in 1950.

“The U.S. ranks seventh in energy consumption per-capita after Canada and a number of small countries.”


["Rising oil prices will affect our consumption habit"]

I wasn’t aware that US energy consumption tripled in the last 55 years but I predict that it won’t triple again in the next 55 years or by 2060. Canada’s growth record is likely much the same, but because of the trend toward significantly higher oil prices in the last ten years, I think that during the next ten we’ll see a significant change in our consumption habits.

Perhaps then we can begin to hope for a future with less climate change chaos.

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More information at the Oil Barrel here.

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