Oil gets to 60 before I do

Well, it looks like oil has done it. It has hit the big six zero more than a year before I will hit mine. Crude futures today in New York sold for $60.55 a barrel, or $1.44 a gallon. It is making gasoline and other oil-based products go up as well. It is due to the Saudis and other OPEC members not being able to convince the rest of the world that they can increase production. In fact, many in the oil business say that they no longer can, and if so, then maybe peak oil has been reached. Kenneth Deffeyes has been predicting that magic moment for 2005 November 24.

To me the important thing is when demand exceeds supply. If reduced supply reduces demand, that postpones that exceeding point. I predict that to occur in 2008. It then remains to be seen whether this will cause severe economic problems for the world, or whether it will cause such a reduction in demand that an oil glut will develop, despite production ability being in decline.

Once again I hear that part of the reason for crude's upward rise is refinery shortages. I don't know why they keep saying that. Maybe it's something they just say. But it does not make sense. Refinery shortages should cause crude prices to go down. If I am crude and can't get refined, then I am worthless. My price should drop then. No, the reason for the increase in crude prices is a perceived crude shortage, which is probably based on a real one. The latest fear is that Gödelized Iran will halt or slow down oil shipments.

I did a least squares fit on oil prices from 2004 January 1 to 2005 June 22, using data from the tax department of the state of Alaska. The resulting equation is:

Crude Oil Price = 35.12599281*exp(0.000852*t)*(1+0.044513*sin(0.0793*t+3.213698406))

where t is the time in days since 2004 January 1 and the argument of the sine is in radians. If you graph this function, you get a wavy exponential increase. There is oscillation going on, probably caused by 2004's huge increases. The formula predicts the following prices:

2005 July 1 57.25
2005 Sept 8 61.95
2005 Oct 12 58.46
2005 Nov 27 66.28
2005 Dec 30 62.55
2006 July 22 81.17
2007 Jan 1 92.69
2008 Jan 1 120.38
2009 Jan 1 163.51
2010 Jan 1 236.55

So that we will hve $237/gallon oil in 2010.