Oil Supply, Demand and Peak Oil

In the comments for my previous post disgustedem, commenting on the current state of Iraq said;

"And yet gas prices are headed over $2.60/gallon. Time to look for a part time bartending job."

Ah yes, thank you, sir, for bringing up the topic I've been dying to discuss, since it doesn't seem to get enough coverage lately....

Ah yes, what exactly contributes to the price of gas? Let's look at the breakdown as supplied by the DOE Energy Information Administration: (source)



So, as of July, Crude accounts for 55% of the price of pump gas. Having said that, what contributes to the price of crude, pray tell?

Getting back to Econ 101, and supply v. demand, let's take a look at the breakdown of global supply and demand as presented earlier this month: (source)



Ah, yes...demand exceeds supply. Further note, that the US is still the big demand hog.

Also note that the EIA has just announced that demand is expected out beat out supply at the end of the year, and early next year.

The moral of the story: Cheap gas ain't coming back anytime too soon, and if it does, it's not sticking around for long, people.