Signs of the Times #10: Crude Oil Boom & Bust

I recall taking a trip to Canada in 1971. The price of a gallon of gasoline was about 28 cents a gallon! Yep, that’s right, 28 CENTS a gallon in the United States. Actually to be accurate about the price it was 28.9 cents a gallon. That point “nine” always fascinated me. Anyway, my friend and I planned to drive to Minnesota to visit his friends and then up to Canada. Well, let me tell you, were we shocked when we crossed the border and filled up our gas tank for the first time. A gallon of gasoline in Canada was 75 cents! a gallon. Needless to say, my vacation budget was blown to bits. Fortunately I had a gasoline credit card and we decided to charge the gas at least while we were in Canada.

Of course those gas prices are now vaporous memories from the distant past. The era was BEFORE OPEC’S collective power was flexed later on in the 80’s and we in the U.S. drove gas-guzzling cars. In fact, my car had a V6 engine. I don’t know from nothin’ about cars but it was a nice car with a powerful engine.

So what does my story have to do with the oil boom and bust? I guess one could draw several lessons or observations from it:

  • Oil prices are not the same everywhere
  • Forming a cartel (in this case) is effective in controlling something
  • Oil supply and demand dictate price
  • Expect the unexpected
  • Scarcity spurs exploration or innovation or???
  • He who has the most chips wins the game

I could go on, but I don’t want to bore you, I think that you get the idea.

In fact, I was going to struggle through some history using various web sources as usual, but came across a white paper, written by Aiman El-Ramly,  on the history of oil exploration:  The seven ages of oil: Boom and bust, war and peace, growth and decline. This white paper is divided into two (2) parts:

Part 1:

Part 2:

***Please note that the opinions of Mr. El-Ramly or others are not necessarily shared by me.

Another article written by Clifford Krauss for the New York Times, has some great graphs and breaks down the “oil price dilemma” into manageable, logical chunks.

Will we see 28-cent oil in the U.S. ever again? I doubt that. Will we see oil booms and busts again? That I would “bank on” while we are an oil-dependent society. Will alternative fuels replace oil? Since I’m not a scientist or engineer I’ll take a pass on that one, but solar, hydroelectric, and wind seem to be “renewable” sources of energy to plan for the future.

I’ll close this posting with a comment and a video. First, the comment:  made by an audience participant at a  multimedia presentation I made back in 1993,  “I live by battery life,”  referring to the use of his computer in his job. Since storing energy for future use is a challenge, e.g. sunshine can’t be saved nor can wind velocity; the necessity of energy storage will be the “mother of invention” for alternative energy sources successes.

On a lighter note, here’s a short video clip from a 1970’s television show, as a salute to the wildcatters of the 1930’s.

Beverly Hillbillies opening theme song

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