$119 - The Only Economic Indicator that Matters

Oil prices hit $119.90 per barrel today. In 2002, during the run up to the Iraq War, oil was trading for as little $22 per barrel. That's a nearly fivefold increase in just six years.

You can have your Dow Jones Industrial Average, your S&P 500, your unemployment rate, your official inflation rate, your currency exchange rate, etc., etc., etc. When it comes to the economy, there is only one figure that really matters.

And right now that figure is $119 a barrel.

Mexico Running Out of Oil

http://biz.yahoo.com/ap/080421/mexico_oil_production.html

Many people don't realize it, but Mexico is actually one of the US's top oil suppliers. Unfortunately, they're running out south of the border:

Mexico's state-run oil company said Monday that oil production fell 7.8 percent to 2.91 million barrels a day in the first quarter as current reserves dwindle.

Petroleos Mexicanos, or Pemex, has struggled with falling reserves, especially at its main Cantarell oil field, and lacks the money and expertise to launch new drilling projects. Pemex only has enough proven oil reserves to last nine years at current production rates.


Nine years. And Mexico will be totally drained.

Peak Oil: It's not just a wacko, lefty looney theory anymore.

Oil Hits $114 a Barrel

Yes, yet another new record today for oil prices. Also, gasoline spiked to $3.38 per gallon a diesel fuel surged to $4.11 per gallon nationally, both also records.

At the risk of overusing my own catchphrase:

Peak Oil, it's not just a wacko, left wing looney theory anymore.

Exxon: No Increase in Oil Production Thorugh 2012

http://www.businessweek.com/print/bwdaily/dnflash/content/mar2008/db20080319_269345.htm

More evidence that those who are raising the alarm about Peak Oil might just be on to something. Exxon, world's largest publicly traded company and bane to environmentalists, global warming activists and hippies everywhere, announced that it will not be see any increase in oil production over the next five years, despite record profits from oil shooting over $100 a barrel.

Does this make any fucking economic sense? Only if you draw the obvious conclusion: they won't increase production because they've reached their absolute production limit.

Be afraid, be VERY afraid.