Oil price increases of 2004 and 2005

Oil price in 2003-2005 Average US retail price of regular unleaded gasoline Oil prices from 1860-1999 in 1999 dollars. Source: [1]

The price of standard crude oil on NYMEX was under $25/barrel in September 2003. By August 11, 2005, the price had been above $60/barrel for over a week and a half. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3].

In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. The average retail price was nearly $3.04 per gallon. The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]

Demand

High demand is led by the U.S. market, the source of an increasing percentage of the world's demand for petroleum. The U.S. economy currently accounts for one-quarter of all demand. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years.

Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. Department of Energy Energy Information Administration estimates: [6]

  • China: 38.9%
  • US: 19.4%
  • Asia outside Japan and China: 13.8%
  • Canada: 4%
  • UK: 3.5%
  • combined other non-OECD: 21%

Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period..

Supply


There are a number of reasons why oil traders feel that oil supplies might be reduced. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa.

In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. market. Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]

World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). This rate of increase is faster than that of any other date in the past. Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil.

The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. One other important cause is the United States dollar's slump against the Euro. Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe.

Causes

Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars.

Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue.

Still others suggest that the main issue is a lack of energy efficiency in industry. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy.

Spring & Summer 2005 increase

Overnight gas price hike shown at a Chicago area bp station (background). The Shell station (foreground) has not yet posted the 12 cent price hike.

After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. In April 2005 the price began to fall, reaching $53.32 on April 9. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60.

Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. influence. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%.

While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand.

Winter 2006 increase

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. This was the highest increase since early October 2005. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. Continued concerns about Iran raised the price to $68.38 on January 31.[10]

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Hurricane Katrina

Gas price hike shown at a Shell station.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. The Gulf Coast is home to a major portion of America's refining capacity. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Port Fourchon has also suffered long term damage. Louisiana Offshore Oil Port has not. [11]

Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. [14] Many of these were blamed on panic buying. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]

On 5:10 p.m. EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity.

In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. These supplies would begin entering the US markets within two weeks of 2 September. [19] [20] The press release from the IEA states, "... the implications for the oil market are global."[21]

Effects

There is controversy regarding the potential effects of oil-price shocks. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. Nevertheless, that loss of revenue would put a strain on government balance sheets. The American Strategic Petroleum Reserve could on its own supply current U.S. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. This could well be the case if a major storm were to hit the gulf, where the reserve is located. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Inflation has increased. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. This was driven by a 4.2% increase in energy costs. As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation.

Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. For example, China and India are currently heavily investing in natural gas facilities. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil.

The increased price of oil also makes previously impractical sources of oil attractive to businesses. The most prominent example of this are the massive reserves of the Canadian tar sands. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Recent months have seen billions of dollars invested in the oil sands.

The increased price of oil might also encourage greater fuel efficiency. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms.

USA Stock markets

Three-year performance of the oil industry... ...and one-month performance.

The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. [25]

Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. [26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. This will likely cause inflationary pressures.

Asia Pacific Region (excludes Australasia)

The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina.

  • In the Philippines, the oil crisis caused its public to call for immediate government assistance. [27] New sources of energy were sought to deal with the crisis.[28]
  • A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]
  • The Indonesian president had instituted subsidies to control the price of gasoline.[30]


Sub-Saharan Africa

High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. High oil prices have created an oil supply instability, per barrel price instability or both. In some cases this has led to fuel rationing being enacted.

  • Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. These nations must resort to limiting imports or rationing their existing supplies.

Latin America & Caribbean

Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. [31]

  • At the same time, Cuba has experienced electricity shortages.

Gulf States & Eurasian Arab-Islamic Regions

Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]


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Iran came under increasing pressure from the European Union in regard to their program to build nuclear power plants.[32]. This is comparable to the Old English poem The Dream of the Rood. [31]. Some churches use the same stripped Christmas tree as a Christian cross at Easter. Venezuela's president, Hugo Chávez, came under increasing scrutiny as he began selling oil at lower-than-market prices to island nations in the Caribbean. Such individuals and Christian denominations are unlikely to celebrate Christmas at all, for the same reason, such as the United Church of God. In some cases this has led to fuel rationing being enacted. Some Christians, again a minority, feel that since "Christmas Trees" are not biblically ordained, they should not be used.

High oil prices have created an oil supply instability, per barrel price instability or both. The only consistancies with Christmas tree customs seem to be that both are made of wood and both are decorated. High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. They would also carry it from place to place as an object to be feared and worshipped.
. A full study of the passage shows that the people would cut down a tree and work it with a chisel to engrave an image in it. The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina. In other English translations of the Bible the verses more explicitly refer to the practice of making idols to be worshipped:.

This will likely cause inflationary pressures. Interpreting those verses as a ban on Christmas trees may be more common among individuals and Christian denominations that are part of the King-James-Only Movement. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. Some Christians, albeit a minority, feel that the practice of having "Christmas Trees" is prohibited by the Book of Jeremiah 10:1-5 which says,. Because Wal-Mart's distribution system relies on the customer to drive to a large discount big-box store, increases in the price of fuel might discourage some customers from making the trip as often. A recent campaign spearheaded by conservative Fox News Channel contributors Bill O'Reilly and Sean Hannity has resulted in a backlash from some Christian groups and individuals who feel the designation "holiday tree" is part of an alleged war on Christmas. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. The term holiday tree has, since at least 1990 (and perhaps before), been used by some in the United States, Canada and the UK to reflect the winter holiday season instead of any specific religious holiday.

[26] Earlier in August, Wal-Mart announced that higher than expected oil prices cut into the corporation's profits for the 2nd quarter of 2005. The term comes from the appearance of Charlie Brown's Christmas tree in the TV special A Charlie Brown Christmas. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. Some tree buyers intentionally adopt such trees, feeling sympathetic to their plights. Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. The term Charlie Brown Christmas tree can be used to described any sad-looking, malformed little tree. [25]. President Jimmy Carter only lit the crowning star atop the Tree in 1979 in honor of the Americans being held hostage in Iran; in 1980, the tree was only fully lit for 417 seconds, one second for each day the hostages had been in captivity.

These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. Today, the lighting of the National Tree is part of what has become a major holiday event at the White House. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. The United States' National Christmas Tree is lit each year south of the White House in Washington, D.C. The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. In some cases the trees represent special commemorative gifts, such as in Trafalgar Square in London where the City of Oslo presents a tree to the people of London as a token of appreciation for the British support of Norwegian resistance during the Second World War and in Newcastle upon Tyne, where the 15 m tall main civic Christmas tree is an annual gift from the city of Bergen, Norway in thanks for the part played by soldiers from Newcastle in liberating Bergen from Nazi occupation. There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms. In some cities festivals are organised around the decoration and display of multiple trees as charity events.

There is also an ever increasing market for hybrid vehicles since they are more fuel efficient; since the 1973 energy crisis, the front-wheel drive passenger car has replaced rear-wheel drive as the preferred layout for energy efficient cars. Many cities, towns, and department stores put up public Christmas trees outdoors for everyone to enjoy, such as the Rich's Great Tree in Atlanta, the Rockefeller Center Christmas Tree in New York City and the large Christmas tree at Victoria Square in Adelaide. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. The "First Christmas Tree in America" is also claimed by Easton, Pennsylvania, where German settlers purportedly erected a Christmas tree in 1816. Recent years have seen a move towards more fuel-thirsty sport utility vehicles in the United States and Canada, and this may be stopped by the high price of gas. Windsor Locks, Connecticut claims that a Hessian soldier put up a Christmas tree in 1777 while imprisoned at the Noden-Reed House, thus making it the home of the first Christmas tree in New England. The increased price of oil might also encourage greater fuel efficiency. There are several cities in the United States which lay claim to that country's first Christmas tree.

Recent months have seen billions of dollars invested in the oil sands. Such patriotic prints of the British royal family at Christmas celebrations helped popularise the Christmas tree in Britain and among the anglophile American upper class. They are a far less cost efficient source of oil than crude, but at 60 dollars a barrel, the tar have recently become very attractive to businesses. Images of the royal family with their Christmas tree at Osborne House were illustrated in English magazines, initially as a woodcut in the Illustrated London News of December 1848, and copied in the United States at Christmas 1850 (illustration, left). The most prominent example of this are the massive reserves of the Canadian tar sands. The generous Prince Albert also presented large numbers of trees to schools and army barracks at Christmas. The increased price of oil also makes previously impractical sources of oil attractive to businesses. In 1847, Prince Albert wrote: "I must now seek in the children an echo of what Ernest [his brother] and I were in the old time, of what we felt and thought; and their delight in the Christmas-trees is not less than ours used to be".

Outside the US, more than 50% of oil is consumed for stationary, non-transportation purposes such as electricity production where it is relatively easy to substitute natural gas for oil. After her marriage to her German cousin, Prince Albert, the custom became even more widespread. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. All the presents being placed round the trees...". For example, China and India are currently heavily investing in natural gas facilities. Queen Victoria as a child was familiar with the custom, in her journal for Christmas Eve 1832, the delighted 13-year-old Princess wrote: "After dinner...we then went into the drawing-room near the dining-room...There were two large round tables on which were placed two trees hung with lights and sugar ornaments. Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. In Britain, the Christmas tree was introduced by King George III's German Queen Charlotte of Mecklenburg-Strelitz, but did not spread much beyond the royal family.

As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation. In France, the first Christmas tree was introduced in 1840 by the duchess of Orleans. This was driven by a 4.2% increase in energy costs. Princess Henrietta von Nassau-Weilburg introduced the Christmas tree to Vienna in 1816, and the custom spread across Austria in the following years. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. In the early 19th century, the custom became popular among the nobility and spread to royal courts as far as Russia. Inflation has increased. It was regarded as a Protestant custom by the Catholic majority along the lower Rhine, and was spread there only by Prussian officials who were moved there in the wake of the Congress of Vienna in 1815.

Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. The Christmas tree remained confined to the upper Rhineland for a relatively long time. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. Wax candles are attested from the late 18th century. In the United States, for instance, each $1000 dollars in GDP required 2.4 barrels of oil in 1973 when adjusted for inflation this number had fallen to 1.15 by 2001. By the early 18th century, the custom had become common in towns of the upper Rhineland, but it had not yet spread to rural areas. While total consumption has increased [22], the western economies are less reliant on oil than they were twenty-five years ago, due to substantial growths in productivity. One Strasbourg priest, Johann Konrad Dannerhauer, complains about the custom as distracting from the word of God.

This could well be the case if a major storm were to hit the gulf, where the reserve is located. During the 17th century, the custom entered family homes. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. The city of Riga, Latvia claims to be home of the first holiday tree, an octagonal plaque in the town square reads "The First New Years Tree in Riga in 1510", in eight different languages. The American Strategic Petroleum Reserve could on its own supply current U.S. Another early reference is from Basel, where the taylor apprentices carried around town a tree decorated with apples and cheese in 1597. Nevertheless, that loss of revenue would put a strain on government balance sheets. It can be traced to 16th century Germany; Ingeborg Weber-Keller (Marburg professor of European ethnology) identified as the earliest reference a Bremen guild chronicle of 1570 which reports how a small fir was decorated with apples, nuts, dates, pretzels and paper flowers, and erected in the guild-house, for the benefit of the guild members' children, who collected the dainties on Christmas day.

Most economists see this as unlikely, partly because all developed countries have high fuel taxes that decrease as oil prices increase and can be eliminated in the event of a dramatic price spike. The modern custom, however, although likely related, cannot be proven to be directly descended from pagan tradition. Some see these increases in the price of oil leading to a recession comparable to those that followed the 1973 and 1979 energy crises or a potentially worse situation such as a global oil crash. According to one legend, Saint Boniface attempted to introduce the idea of trinity to the pagan tribes using the cone-shaped evergreen trees because of their triangular appearance. There is controversy regarding the potential effects of oil-price shocks. According to Adam of Bremen, in Scandinavia the pagan kings sacrificed nine males of each species at the sacred groves every ninth year. the implications for the oil market are global."[21]. Among early Germanic tribes the Yule tradition was celebrated by sacrificing male animals and slaves by suspending them on the branches of trees.

[19] [20] The press release from the IEA states, ".. Patron trees (for example, the Irminsul, Thor's Oak and the figurative Yggdrasil) held special significance for the ancient Germanic tribes, appearing throughout historic accounts as sacred symbols and objects. These supplies would begin entering the US markets within two weeks of 2 September. A branch of flowering Glastonbury thorn is still sent annually for the Queen's Christmas table in the United Kingdom. In order to stabilize world energy supplies, the International Energy Agency offered to sell two million barrels of crude oil and other refined products from national supplies. Medieval legends, nevertheless, tended to concentrate more on the miraculous "flowering" of trees at Christmas time. Bush stated, "This storm has disrupted the ability to make gasoline and deliver gasoline," and "This is going to be a difficult road."[18] Many people have observed however that stores of crude oil do little to address inadequate refinery and distribution capacity. In Roman mosaics from what is today Tunisia, showing the mythic triumphant return from India of the Greek god of wine and male fertility, Dionysus (dubbed by some modern scholars as a life-death-rebirth deity), the god carries a tapering coniferous tree.

EDT, on 31 August, President Bush announced the Energy Department was approving loans from the Strategic Petroleum Reserve and that EPA announced nationwide waver on fuel blends. The Christmas tree is often explained as a Christianization of the ancient pagan idea that the evergreen tree represents a celebration of the renewal of life. On 5:10 p.m. After the holidays, dead trees can be put to other uses:. Airports began to report shortages in aviation fuel on 2 September.[15] A shortage could lead to a decrease in food production.[16] Higher prices for heating oil and natural gas were expected as the winter heating season set in.[17]. These tips will ensure the tree will stay fresh for several weeks. [14] Many of these were blamed on panic buying. This tradition seems to be limited mostly to the United States.

Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. Flocking can be done with a professional sprayer at a tree lot (or the manufacturer if it is artificial), or at home from a spray can, and either can be rather messy. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. Typically it would be sprayed all over the tree from the sides, which produced a look different from real snow, which settles in clumps atop branches. Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. In the 1980s some trees were sprayed with fluffy white flocking to simulate snow. [11]. A plain mat of fabric or plastic may also be placed under the stand and skirt to protect the floor from scratches or water.

Louisiana Offshore Oil Port has not. Generally, the difference between a mat and skirt is simply that a mat is placed under the tree stand, while a skirt is placed over it, having a hole in the middle for the trunk, with a slot cut to the outside edge so that it can be placed around the tree (beneath the branches) easily. Port Fourchon has also suffered long term damage. As Christmas presents arrive, they are generally placed underneath the tree on the tree skirt (depending on tradition, all Christmas gifts, or those too large to be hung on the tree, as in "presents on the tree" of the song "White Christmas"). The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. A nativity scene, model train, or Christmas village may be placed on the mat or skirt. The Gulf Coast is home to a major portion of America's refining capacity. What began as ordinary cloth has now often become much more ornate, some having embroidery or being put together like a quilt.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. Even when dripless candles, electric lights and artificial trees have been used, a skirt is still usually used as a decorative feature: among other things, it hides the tree stand, which may be unsightly but which is an important safety feature of home trees. Continued concerns about Iran raised the price to $68.38 on January 31.[10]. Since candles were used to light trees until electric bulbs came about, a mat (UK) or "skirt" (US) was often placed on the floor below the tree to protect it by catching the dripping candle wax, and also to collect any needles that fall. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. Many people also decorate outdoor trees with food that birds and other wildlife will enjoy, such as garlands made from unsalted popcorn or cranberries, orange halves, and seed-covered suet cakes. This was the highest increase since early October 2005. Conversely, trees decorated by professional designers for department stores and other institutions will usually have a "theme"; a set of predominant colours, multiple instances of each type of ornament, and larger decorations that may be more complicated to set up correctly.

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. Individuals' decorations vary wildly, typically being an eclectic mix of family traditions and personal tastes; even a small unattractive ornament, if passed down from a parent or grandparent, may come to carry considerable emotional value and be given pride of place on the tree. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand. Baubles are another extremely common decoration, and usually consist of a fairly small hollow glass or plastic sphere coated with a thin metallic layer to make them reflective, and then with a further coating of a thin pigmented polymer in order to provide colouration. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. Strands of tinsel may be hung in groups from longer branches to simulate icicles, though this trend has gradually fallen off since the late 1970s. While the street price of gasoline usually corresponds to the price of crude oil, refinery capacity can become the governing factor, particularly during periods of high demand. Lighting with candles or electric lights (fairy lights) is commonly done, and a tree topper completes the ensemble.

Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%. Delicate mould-blown and painted coloured glass Christmas ornaments were a specialty of Czech glass factories from the late 19th century, and have since become a large industry, complete with famous-name designers. During mid-August, with a string of refinery snags (fires/other deterrents to oil refining), shrinking gasoline inventories, and a growing thirst for oil by American consumers, New York Mercantile Exchange traded crude oil futures surged past the $66 mark and briefly touched $67/barrel. Tinsel and several types of garland or ribbon are commonly used to decorate a Christmas tree. influence. Organically grown Christmas trees are available in some markets, and as with many other crops, are widely held to be better for the environment. Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. In some cases management of Christmas tree crops can result in poor habitat since it involves heavy input of pesticides and herbicides.

In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60. Live trees are typically grown as a crop and replanted in rotation after cutting, often providing suitable habitat for wildlife. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. Real trees also help reduce the amount of carbon dioxide in the atmosphere while growing. In April 2005 the price began to fall, reaching $53.32 on April 9. Real trees are used only for a short time, but can be recycled and used as mulch or used to prevent erosion [2]. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. Artificial trees can be used for many years, but are usually non-recyclable, ending up in landfills.

The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. Polyethylene trees are less toxic, though more expensive, than PVC trees [1]. After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. For instance, the bark of a real tree can be used to surface an artificial trunk. These analysts believe the problem would be solved by increasing the efficiency of factories, homes and transportation and easing the demand crunch by using less energy and more renewable energy. A small amount of real-tree material is used in some artificial trees. Still others suggest that the main issue is a lack of energy efficiency in industry. Some trees have a warning that dust or leaves from the tree should not be eaten or inhaled.

A July 14, 2005 Morgan Stanley report[9] suggests that opinions of the oil market could burst just like a bubble if indications of declining Asian demand continue. Artificial trees are usually made out of PVC, a toxic material which is often stabilised with lead. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. There is some debate as to whether artificial or real trees are better for the environment. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. Real potted ones are often sold like this, and artificial ones often come with a "root ball" but only sometimes with decorations. Others believe that the price of oil is almost entirely speculative, and that the increase in price is due to oil speculation extending into the long term. A long-standing and simple gimmick is conifer seedlings sold with cheap decorations attached by soft pipe cleaners.

Not only is there a limited amount of fossil fuels which have been burnt as fuel, but however much remains will be used faster by a growing industrialized world population and what remains will be more dificult to get since the easiest wells have been tapped and the remaining sources will be fought over in resource wars. Past gimmicks include small talking or singing trees, and trees which blow "snow" (actually small styrofoam beads) over themselves, collecting them in a decorative cardboard bin at the bottom and blowing them back up to the top through a tube hidden next to the trunk. A more fundamental problem that some believe is causing the price to rise is the probability of peak oil already or soon to be reached. Retailers also claimed that the trees were popular because they allowed larger presents to be placed beneath the trees. Critics argue that these problems periodically push price higher, but that they are not fundamental or long term enough to cause the large jump in gas price. Customers then wanted to replicate the inverted tree. Some people and news agencies argue that labor strikes, hurricane threats to oil platforms, fires and terrorist threats at refineries, and other general problems are responsible for the higher gas prices. They were originally sold as decorations for merchants that allowed customers to get closer to ornaments being sold.

Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe. In 2005 inverted trees became popular. One other important cause is the United States dollar's slump against the Euro. Some are instead lit partly or completely by fibre optics, with the light in the base, and a rotating colour wheel causing various colours to shimmer across the tree. The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. Since the late 1990s, many indoor artificial trees come pre-strung with lights. Even if oil supplies themselves are not reduced, some experts feel the easily accessible sources of light sweet crude are almost exhausted and in the future the world will depend on more expensive sources of oil. Some skyscrapers will tell certain offices to leave their lights on (and others off) at night during December, creating a Christmas tree pattern.

Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. A few hotels and other buildings, both public and private, will string lights up from the roof to the top of a small tower on top of the building, so that at night it appears as a lit Christmas tree, often using green or other coloured lights. This rate of increase is faster than that of any other date in the past. These lights are usually white, but often are green, red, red/green, blue/white, blue, or multicoloured, and sometimes with a small controller to fade colours back and forth. World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). lawns in the 2000s, along with 1990s spiral ones that hang from a central pole, both styles being lighted with standard miniature lights. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]. Outdoor branched trees made out of heavy white-enameled steel wires have become more popular on U.S.

Short-term shutdowns because of power outages knocked out two major on-shore pipelines, and at least 10% of the nation's refining capacity was not operating in the wake of the storm. Other artificial trees which look nothing like a conifer except for the triangular or conical shape, are also used as tabletop decorations, such as a stack of ornaments. market. More recent tinsel trees can be used fairly safely with lights. In late August, 2005, Hurricane Katrina crippled the supply-flow from off-shore rigs in the Gulf Coast, the largest source of oil for the domestic U.S. They were instead lit by a spotlight or floodlight, often with a motorised rotating color wheel in front of it. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa. They were aluminium-coated paper, meaning that they also posed a great fire hazard if lights were put directly on them (warnings to this effect are still issued with most christmas tree lights).

The war in Iraq, Iran's nuclear program, and questions about Saudi Arabia's internal stability all could in the future lead to a dramatic fall in the supply of oil. The first trees which were not green were the metallic trees of the 1950s and 1960s. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. Around 2003, some trees with molded-plastic branches started selling in the U.S..
There are a number of reasons why oil traders feel that oil supplies might be reduced. Better trees also have more branch tips, the number usually listed on the box. Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period.. Most of the better trees have branches hinged to the pole, though the less-expensive ones generally still come separately.

Department of Energy Energy Information Administration estimates: [6]. Many trees now come in "slim" versions, to fit in smaller spaces. Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. These trees have become a little more realistic every year, with a few deluxe trees containing multiple branch styles. New demand is also coming from emerging industry in third world nations, including India and especially China which is developing a western-style car culture and whose manufacturing bases have grown very rapidly in recent years. Many also have very short brown "needles" wound in with the longer green ones, to imitate the branch itself or the bases that each group of pine (but not other conifer) needles grows from. economy currently accounts for one-quarter of all demand. Those first trees looked like long-needled pine trees, but later trees use flat PVC sheets to make the needles.

The U.S. Each row of branches is a different size, colour coded at the base with paint or stickers for ease of assembly. market, the source of an increasing percentage of the world's demand for petroleum. The bases of the branches were then twisted together to form a large branch, which was then inserted by the user into a wooden pole (now metal with plastic rings) for a trunk. High demand is led by the U.S. They were made the same way, using animal hair (mainly pig bristles) and later plastic bristles, dyed pine-green colour, inserted between twisted wires that form the branches. . The first modern artificial Christmas trees were produced by companies which made brushes.

The previous high was $2.38 per gallon in March 1981, which would be $3.03 per gallon after adjusted for inflation.[4][5]. in 1913, in the Sears, Roebuck and Company catalog. The average retail price was nearly $3.04 per gallon. The first feather trees came to the U.S. In the United States gasoline prices reached an all time high during the first week of September 2005 in the aftermath of Hurricane Katrina. Originating in Germany in the 19th century to prevent further deforestation, these "minimalist" trees show off small ornaments very well. A record price of $70.85 per barrel was reached on August 29, 2005.[2] While oil prices are considerably higher than a year ago, they are still roughly 25$ from exceeding the inflation-adjusted "peak of the 1980 shock, when prices were over $90 a barrel in today’s prices" [3]. The first artificial trees were tabletop feather trees, made from green-dyed goose feathers wound onto sticks drilled into a larger one, like the branches on a tree.

By August 11, 2005, the price had been above $60/barrel for over a week and a half. They may also be necessary for people who have an allergy to conifers, and are increasingly popular in office settings. The price of standard crude oil on NYMEX was under $25/barrel in September 2003. Artificial trees are sometimes even a necessity in some rented homes (especially apartment flats), due to the potential fire danger from a dried-out real tree, leading to their prohibition by some landlords. At the same time, Cuba has experienced electricity shortages. In the U.S., about 70% of trees are now artificial. These nations must resort to limiting imports or rationing their existing supplies. At the end of the Christmas season artificial trees can be diassembled and stored compactly, but some artificial-tree owners simply store the whole decorated tree covered in a large bag, ready for the next year.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. Trees come in a number of colours and "species", and some come pre-decorated with coloured lights. The Indonesian president had instituted subsidies to control the price of gasoline.[30]. Artificial trees are very popular, particularly in the U.S., where despite their lack of realism (both in looks and scent), they are considered more convenient and (if used for several years) less expensive than real trees. A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]. In the UK, The British Christmas Tree Growers Association represents the interests of all those who grow Christmas trees in Great Britain and Northern Ireland. [27] New sources of energy were sought to deal with the crisis.[28]. In the past, Christmas trees were often harvested from wild forests, but now almost all are commercially grown on tree farms.

In the Philippines, the oil crisis caused its public to call for immediate government assistance. The shearing also damages the highly attractive natural symmetry of unsheared trees. combined other non-OECD: 21%. European tradition prefers the open aspect of naturally-grown, unsheared trees, while in North America (outside much of the Rockies) there is a preference for close-sheared trees with denser foliage, but less space to hang decorations. UK: 3.5%. Others are produced in a container and sometimes as topiary for a porch or patio. Canada: 4%. These trees must be kept inside only for a few days, as the warmth will bring them out of dormancy, leaving them little protection when put back outside into the midwinter cold in most areas.

Asia outside Japan and China: 13.8%. However, the combination of root loss on digging, and the indoor environment of high temperature and low humidity is very detrimental to the tree's health, and the survival rate of these trees is low. US: 19.4%. Some trees are sold live with roots and soil, often from a nursery, to be planted later outdoors and enjoyed (and often decorated) for years or decades. China: 38.9%. Norfolk Island pine is sometimes used, particularly in the Oceania region, and in Australia some species of the genera Casuarina and Allocasuarina are also occasionally used as Christmas trees. The long-needled Eastern White Pine is also used there.

Virginia Pine is still available on some tree farms in the southeastern United States, however it has poor winter colour and sharp needles. Less-traditional conifers are sometimes used, such as Giant Sequoia, Leyland Cypress and Eastern Juniper. Several other species are used to a lesser extent. and in North America:.

Commonly used species in northern Europe (including the UK) are:. The best species for use are species of fir (Abies), which have the major benefit of not shedding the needles when they dry out, as well as good foliage colour and scent; but species in other genera are also used. Both natural and artificial trees are used as Christmas trees. In Germany, the Catholic people takes their Christmas trees down by the 2nd of February.

In Europe, private Christmas trees are not usually put up until at least the middle of December and are usually taken down by the 6th of January. In more northern climates and into Canada, the tree (if not too dry) and other decorations are left up well into January. homes is to put the tree up right after Thanksgiving (the fourth Thursday in November) and to take it down right after the New Year. The most common tradition in U.S.

Modern commercialisation of Christmas has however resulted in trees being put up much earlier; in shops often as early as late October. Traditionally, Christmas trees were not brought in and decorated until Christmas Eve (24 December), and then removed the day after twelfth night (i.e., 6 January); to have a tree up before or after these dates was even considered bad luck. . It is normally an evergreen coniferous tree that is brought into a home or used in the open, and is decorated with Christmas lights and colourful ornaments during the days around Christmas.

A Christmas tree is one of the most popular traditions associated with the celebration of Christmas. In coastal areas, trees can be used to protect sand dunes from erosion. Trees can be cut into small pieces and use for mulch or composted; some cities offer this service to their residents. Use the tree as a bean or pea support pole.

Use needles in a sachet. Use your tree as a bird feeder, hanging suet balls or other food from the branches. Place your tree away from heat sources, including radiators and windows that get a lot of direct sunlight. Only use plain water; research shows that additives such as sugar, cola and aspirin do more harm than good.

Check it daily. Make sure your tree has a sturdy Christmas tree stand that holds 4-6 litres of water. This allows the tree to continue taking up water, by removing the resin-soaked wood at the original cut. Just before placing it in the stand, cut 2-3 centimeters off the trunk.

Before taking your tree inside, gently bang the tree on its stump several times to dislodge any loose needles. If possible, the night before decorating, bring the tree into a partially heated area to allow it to adjust gradually to temperature changes. If decoration is not planned immediately, store the tree in a cool environment protected from the sun and wind. When transporting the tree, protect it from wind and road salts by covering it with plastic.

Stone Pine Pinus pinea (as small table-top trees). Scots Pine Pinus sylvestris. Douglas-fir Pseudotsuga menziesii. Red Fir Abies magnifica.

Noble Fir Abies procera. Fraser Fir Abies fraseri. Balsam Fir Abies balsamea. Scots Pine Pinus sylvestris.

Serbian Spruce Picea omorika. Norway Spruce Picea abies (generally the cheapest). Noble Fir Abies procera. Nordmann Fir Abies nordmanniana (as in the photo).

Silver Fir Abies alba (the original species).

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