Yet again, oil prices have broken another record today, rising to $64/barrel. Have prices reached their peak? Not likely, says Daniel Yergin, chairman of Cambridge Energy Research Associates. According to an article written by Yergin that appeared on July 31st in the Washington Post, the oil market is "even tighter than it was on the eve of the 1973 oil crisis." Additionally, Yergin predicted that "surprise" events such as political instability, hurricanes, a heat wave, etc. could spur additional hikes.
Yergin should know what he's talking about. Not only is he a specialist on energy and international politics, strategy, and economics; he's also chairman of the U.S. Department of Energy's Task Force on Strategic Energy Research and Development (he even won a Pulitizer in '92 for his non-fiction book titled The Prize: The Epic Quest for Oil, Money, and Power, which was a number-one national bestseller).
While Yergin also mentioned that oil supplies are likely to grow 20% over the next 5 years, he is also forecasting that oil demand from countries like China & India will cause the world to consume 50% more oil in 25 years than is consumed now...
So, Chicken Little, if you're worried that the sky's falling, relax. This is just a small bump in the road. The real challenge is the mountain on the horizon. In the meantime, expect more bumps to come. All the more reason to spin your pedals on a Great Bike Trail.
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