From: The Oil Drum - May 30, 2008

With oil reaching $135 / barrel, this article seeks to analyse and explain why oil prices are rising exponentially:

The Oil Drum: Europe | Why oil costs over $120 per barrel



The analysis considers the following perspectives: (The Oil Drum: Europe | Why oil costs over $120 per barrel)
• Production and demand
• Decline of older fields
• Declining net energy and energy density
• New mega-projects
• OPEC spare capacity
• Peak exports

The conclusions drawn are that we are now in the early stages of a full blown energy crisis that was predictable if not wholly avoidable. The analyst believes that politicians are awaking to the crisis, now that escalating energy costs make its existence plain to see, but contend that it is highly unlikely that politicians will now grasp the gravity of the situation that the OECD and rest of the world faces and that the responses will likely be ineffectual and too little too late. The principal reason for current high oil price is the proximity of a peak in global oil production. Politicians must understand this and then grasp that natural gas and coal supplies will follow oil down by mid century. Reducing taxes on energy consumption right now is the wrong thing to do. Taxation structure needs to be adjusted to oblige energy producing companies to re-invest wind fall profits in alternative energy sources on a truly massive scale. Energy efficiency should be the guiding beacon of all policy decisions and this must apply equally to energy production and energy consumption.

Related: ALTERNATIVE ENERGY BLOG - Solar-Energy-Wind-Power.com