In case you hadn’t noticed, crude oil prices are spiking once again. Last fall, they squeaked above US $56 per barrel—nominally, the highest price ever—before settling down to just over US $41 after Christmas.
Earlier today, crude prices hit $54.60, very close to their all time record:
(Note: this is the price for "high quality" crude oil delivered to Cushing, OK—which is typically what is meant when people talk about oil prices on the spot market. The heavier oil that comes from Alaska—the source of much of Cascadia’s petroleum–is priced a little bit lower, but was still near $50/barrel yesterday; Alaskan oil price trends generally track those of the US overall.)
The reason that prices are so high, and so volatile, is complicated—it’s some combination of global supplies failing to keep pace with surging demand, oil traders trying to capitalize on short term price movements, and a premium the market is demanding because the global oil supply is so vulnerable to disruption.
But what it means for the Northwest is simple. Residents of Washington, Oregon, and Idaho consume a combined 28.6 million gallons of petroleum per day. But the states produce none of it. At $50 per barrel the Northwest states lose $34 million every day just to pay for petroleum imports. Over the course of a single year, that’s $12.7 billion lost to the region’s economy—money that, if it were used for just about anything else, would be far less likely to skip town.
Clarification:Cascadia Scorecard 2005 mentions that the Northwest states lose $30 million dollars a day on oil and gas combined. That’s based on average prices for 2004. The $34 million per day figure for petroleum alone, cited in the post above, assumes 12 consecutive months of $50/barrel oil.
Oh, and another thing—it was a mighty volatile day on the energy markets. Crude futures prices (that is, a contract for delivering crude at the beginning of April) started the day at $53, peaked as high as $55.20 at midday, but fell to $53.55 by the time the market closed. Click on the image to see the ride…
Update: See Oily to Rise II for more on the US economy and energy efficiency.