The Oil Drum: New York City

Helping New Yorkers understand, prepare and adapt to the implications of Peak Oil

Sunday, July 17, 2005

Sample Letter about Peak Oil

Dear Friends and Family

I have been reading extensively about the possibility that we may soon reach (if we haven't already reached) the peak in global oil production (where demand can not satisfy supply and price increases as a result). Oil prices have risen steadily over the last 4 years from the $20-30 range in 2001 to poking above $60 for the first time ever recently.

While oil prices seem to have stabilized in the high $50 range for now, the stuff I've been reading suggests that later this summer while vacation season is still in swing and simultaneously refineries have to start building inventory for the winter home heating fuels, things will start to get a little tighter and could easily drive prices into the $70-80 range. This could cause further speculation as outlined in a recent Goldman Sachs report that predicted oil might reach a price of over $100 in the not too distant future.

Normally the oil producing countries could simply increase production as they have in the past, but two factors have combined to make this a near impossibility.

First, OPEC has publicly stated that they can not increase production at this time and most non-OPEC countries have already peaked. For instance a few weeks ago the UK reported that their North Sea production had declined by 15% versus this time last year.

Second, refining capacity is in the high 90% range, so even if there were a significant increases in crude oil supply, it is not clear if any more could be made useful faster than it currently is.

The implications for significantly higher oil prices will affect everything from gas prices, home heating costs, food costs, and could cause the type of stagflation that occurred during the 1970s, but this time there is no political solution. The problem will only continue to get worse until more alternatives start to get to more of a critical mass, but that is not expected for at least 2 decades.

Please start preparing for this depending on how these changes will affect you.

  1. Reduce your energy usage overall - heating/cooling, transportation, etc.
  2. Invest in raising the efficiency of your home and appliances.
  3. Keep up with the latest news on the subject.
  4. Talk about this with your friends and neighbors.
  5. Make this an issue that has to be addressed by public officials


In this blog, I will specifically address how peak oil will affect the NYC area, focusing mostly on Manhattan but also including the other four boroughs, Westchester, Northern Jersey and Southern Connecticut.


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