The scope of the supply problem became more clear in the latest quarter when the five biggest publicly traded oil companies, including Exxon Mobil, said their oil output had declined by a total of 614,000 barrels a day, even as they posted $44 billion in profits. It was the steepest of five consecutive quarters of declines.
While that drop might not sound like much in a world that consumes 86 million barrels of oil each day, today’s markets are so tight that the slightest shortfalls can push up prices.
Along with mature fields, the companies have contracts with producing countries whose governments allocate fewer barrels to oil companies as prices rise.
“It has become really, really difficult to grow production,” said Paul Horsnell, an analyst atBarclays Capital. “International companies have a portfolio of assets in areas of significant decline and no frontier discoveries to make up for that.”
One reassuring point is that at least in the developed world, people are rapidly shifting away from ridiculously conspicuous consumption. Hummer sales have plummeted, and the carmakers can hardly sell new SUV's and pickups. Almost every car ad on TV now either offers $8k-10k discounts on SUV/trucks or trumpets the high mileage of the small cars they sell. Americans have scaled way back on driving and gas consumption. That is in large part what's responsible for the current dip in prices. That and the strengthening dollar. However, in India and in China, where fuel prices are highly subsidized, demand continues to grow largely unabated, so we shouldn't expect the current decline to last.
What should we do? Remember, "where your treasure is, there also will your heart be. (Matt 16:21)" The things of this world will pass away, so focus on the heavens. In an age and culture where car/house=identity, there is a real and living Person who can give us the incorruptible life...
Also, you can ride a bike to save money on gas. ;-)