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]. Washington Area Film Critics Awards. [31]. Screen Actors Guild Awards. 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. Satellite Awards. In some cases this has led to fuel rationing being enacted. San Francisco Film Critics Circle Awards.

High oil prices have created an oil supply instability, per barrel price instability or both. Phoenix Film Critics Awards. High oil prices are hurting many countries in Africa, including Zimbabwe, Eritrea and Tanzania. Online Film Critics Society.
. New York Film Critics Awards. The Pacific rim had been experiencing this crisis on an ongoing basis prior to Hurricane Katrina. National Society of Film Critics Awards.

This will likely cause inflationary pressures. Las Vegas Film Critic Awards. Wal-Mart, like all retailers, will also face higher shipping costs to get goods from the factory to the stores. Kansas Film Critcs Awards. 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. Golden Globe Awards. Since oil prices after the end of the 2nd quarter continued to rise, 3rd quarter profits from Wal-Mart are expected to be small. Florida Film Critic Awards.

[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. Broadcast Film Critic Awards. Over two years, stock in Wal-Mart dropped in value by 25% from $60 per share to under $45 per share. Boston Society of Film Critics Awards. Wal-Mart shares continued their decrease in value that began with the increase in the oil prices. In addition, some critics also state that this movie is more of an actor/actress showcase than a movie itself. [25]. Further, Anderson wrote, the director Mangold "stretches and dilutes the core story until it resembles less a great man's life than a TV movie of the week.".

These prices increased more rapidly toward the end of August, particularly after Hurricane Katrina. Anderson [2] believed the film suffered from the typical fate of the biopic, stating that important events are distilled into meaningless and unrealistic circumstances. The value of the stock in companies such as Apache[23] and Conoco-Phillips [24] rose sharply during this period. Yet some, like Las Vegas Weekly reviewer Jeffrey M. The increase in oil prices over two years was mirrored by an increase in stock values in the energy sector. They do their own singing with a startling mastery of country music's narrative musicianship.". There is an increasing demand of crossover sport utilities which are more fuel efficient - especially for those based on passenger car platforms. They act with every bone and inch of flesh and facial plane, and each tone and waver of their voice.

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. For example, Baltimore Sun reviewer Michael Sragow[1] wrote, "What Phoenix and Witherspoon accomplish in this movie is transcendent. The September 2005 sales data for all the vehicles vendor indicated SUV sales dropped while small cars sales increased compared with 2004 sales. Critics generally responded with positive reviews, garnering an 83% on Rotten Tomatoes. 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. Phoenix and Witherspoon performed their own vocals in the film's numerous stage appearances. The increased price of oil might also encourage greater fuel efficiency. June, despite her shock, says yes.

Recent months have seen billions of dollars invested in the oil sands. Cash responds that he can only continue singing the song with her if they will get married and so proposes to her onstage. 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. In the middle of the song, Cash stops singing and June looks concerned. The most prominent example of this are the massive reserves of the Canadian tar sands. At the concert, June tells Cash that he can only talk to her onstage.
The concert features "Ring of Fire", which Cash credits to June before persuading her to join him in a duet of "Jackson". The increased price of oil also makes previously impractical sources of oil attractive to businesses. This appears to have been a common event, as Cash tells her that that was the last time - June's response is that she doesn't like "re-runs".

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. En route to one performance (at 2AM), he proposes to June, who turns him down. Nigeria is working on burning natural gas to produce electricity instead of simply flaring the gas. His record company is dubious, arguing that the musical world has changed in the time Cash was rehabilitating, however he says bluntly that he will perform on a given date and the label can use the tapes if they think the music is any good.
The concert is a great success, and Cash embarks on a tour with June and his old band. For example, China and India are currently heavily investing in natural gas facilities. As he returns to normal, Cash notices that many of his fans are prisoners, so he presents a proposal to record a live album inside Folsom Prison. Economists say that the substitution effect will spur demand for alternate energy sources, such as coal or liquified natural gas. Under the influence of the Carters (which extends to June's father chasing away Cash's drug dealer with a rifle), Cash cleans himself up.

As a result during this period the Federal Reserve has rapidly been increasing interest rates to curb inflation. Cash's response is to try furiously to remove a stump from the ground with his tractor, an attempt which ends with the tractor reversing into the lake and Cash being rescued by June (who was told by her father "You're already down there", in response to her protests that she was not going to help him out). This was driven by a 4.2% increase in energy costs. His parents, and the extended Carter family (June, her daughters and her parents) arrive for Thanksgiving, at which time Cash Snr berates Cash over his lack of achievement. In the United States, the Consumer Price Index rose by 0.6% compared to 0.2% for September. On the way back, he collapses in the rain and - on coming round the next day - sees a large house near a lake and promptly buys it. Inflation has increased. The pair separate and Cash moves to Nashville, where he shares living quarters with Waylon Jennings.
Cash attempts to reconcile with June, which involves a long walk to her house.

Despite the rapid increase in the price of oil, neither the stock markets nor the growth of the global economy have been noticeably affected. Later again, the tensions in Cash's marriage flare up as he attempts to put up "pictures of my band" (including a very large one of June) over his wife's objections. But oil's historically high ratio of Energy Returned on Energy Invested continues a significant decline. It is at this point that a distraught June begins to write "Ring of Fire". 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. As a result, the rest of the tour is cancelled and June gets rid of Cash's drugs. 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. That night's concert sees Cash incoherent during his customary "Hello, I'm Johnny Cash" opening, as well as forgetting the lyrics to a song, losing control of the microphone stand, kicking the footlights and ultimately passing out.

This could well be the case if a major storm were to hit the gulf, where the reserve is located. The next morning, as June is on the phone to one of her daughters, she notices Cash taking several pills. demand for about a month in the event of an emergency, unless it is also destroyed in the emergency. After one performance, Cash and June sleep together in her hotel room. The American Strategic Petroleum Reserve could on its own supply current U.S. Despite his wife's objections to the level of interest he is paying her, Cash persuades June to come out of semi-retirement and tour with him.
The tour is a great success, although backstage Cash's wife is critical of June's influence. Nevertheless, that loss of revenue would put a strain on government balance sheets. Some time later, Cash, still addicted (his father tells him that he would do well to start "sleeping at night...or eating"), takes his wife to an award show to which June also goes.

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. Despite her objections, Cash decides on a love song and kisses her in the middle of the performance, after which she storms off the stage and they go their separate ways - despite Cash's protest that "it was only a song". 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. June tells him (and many of the other artists on the tour) at one point that they cannot "walk the line", prompting Cash to write "I Walk The Line".
This erratic behaviour peaks one night when Cash invites June onstage to sing a duet. There is controversy regarding the potential effects of oil-price shocks. When his romantic intentions are rebuffed one night in rural Georgia, Cash is offered drugs and alcohol and soon begins to behave erratically. the implications for the oil market are global."[21]. Cash's career goes from strength to strength, and he finds himself spending more time with June, who divorces her husband at this time.

[19] [20] The press release from the IEA states, ".. On this tour (along with Jerry Lee Lewis, Roy Orbison and Elvis Presley), he meets June Carter, who is both a singer (although she claims to have no talent) and a comedienne in the performances. These supplies would begin entering the US markets within two weeks of 2 September. Despite his bandmates not knowing the tune, he strikes up "Folsom Prison Blues" and is rewarded with a contract, which soon has him touring with the other Sun artists. 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. One day, he walks past a recording studio and is inspired to put a band together (which his wife describes as being made up of "two mechanics who can't even play") to play gospel music.
Cash and his band audition for Sun Records in front of Sam Phillips, and Cash is told to play a song which sums him up. 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. Vivian and John (as he is now generally known) live in relative poverty while John works as a door-to-door salesman.

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. Following his discharge, he marries his girlfriend Vivian. On 5:10 p.m. He appears not to enjoy his time there, but finds solace in playing a guitar he bought and writing songs - one of which becomes "Folsom Prison Blues". 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]. joins the Air Force and is posted to Germany. [14] Many of these were blamed on panic buying. J.R.'s relationship with his father was strained since he was young, yet was made much more severe with the death of Jack.
Several years later, J.R.

Shortages were feared or experienced in several states including Tennessee [12], Alabama [13], and South Carolina. quickly learns, Jack has been fatally wounded by the saw. In Stockbridge, Georgia, regular gas prices came to $5.87 at a BP station. As he is walking back home, he is intercepted by his father, flush with blood stains on his overalls, asking "Where have you been?" As J.R. Gas prices soared after the closing down of the major pipelines connecting the gas of the Louisiana region to the entire East Coast. With Jack's permission, he leaves to go fishing. [11]. A few scenes later, Jack is sawing wood as a job for a neighbor when Johnny declares it to be boring, and would rather be somewhere else.

Louisiana Offshore Oil Port has not. J.R., who can sing well like his mother, is very adept with the hymns they sing at church. Port Fourchon has also suffered long term damage. Jack, who is training to become a pastor, and therefore "needs to know the Bible front to back", is much better at dealing with the wording and stories of the Bible. The port of Louisiana is one of its most important inlet for oil imports, and the gulf itself is a major oil producer. Early in the movie, Cash and Jack discuss their different strengths and weaknesses in regard to the Bible and hymns. The Gulf Coast is home to a major portion of America's refining capacity. The next scene depicts Cash as a boy (then called "J.R.") and his brother Jack listening to the radio, and hearing a 10-year-old June Carter singing, providing a foreshadow into J.R.'s obsession with her in the future.

Hurricane Katrina had a major impact on oil and gas prices, especially within the United States. After repeated calling, we are made aware that the hand belongs to Cash, and it is later revealed that the voice belongs to the prison's warden, calling for him to go on stage. Continued concerns about Iran raised the price to $68.38 on January 31.[10]. A buzz saw sits ominously on a table in the center of the screen, as a solitary hand casually strokes the blades. Observers believe that violence in Nigeria, and Iran's friction with the West are responsible for this price increase. The camera settles on an shot of inmates cheering as Cash's band is playing a loop of notes. This was the highest increase since early October 2005. As the camera passes empty halls and cells, the music becomes louder and clearer, and cheering of inmates can be heard.

On January 17, sweet crude oil for February delivery rose by $2.38 (3.7%) to $66.30 a barrel. The camera moves towards the prison as faint music plays in the background. As a result, shortage of a particular grade of oil can keep street prices high, even when overall supply exceeds demand. In the opening scene, we see an outside shot of Folsom Prison, where the grounds are quiet, and the two solitary guards on their perch peer towards the main building. In addition, there are different grades of oil and each refinery is typically configured to process a narrow range of grades. The film details Cash's (Phoenix) life from his growing up as the son of a cotton picker in rural Arkansas to his drug addiction and subsequent rescue by future wife June Carter (Witherspoon) in his famous concert at Folsom Prison. 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. .

Over the course of three weeks leading up to August 10, crude oil prices had risen by 13%. This film has been nomininated for five Academy Awards including Best Actor (Joaquin Phoenix) and Best Actress (Reese Witherspoon). 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. The film previewed at the Telluride Film Festival on September 4, 2005 and went into wide release on November 18. influence. Walk the Line's production budget is estimated to have been $28,000,000. Saudi Arabian King Fahd's death on August 1, 2005, meant a new regime that may be less amicable to U.S. The title is taken from the title of one of Cash's best known songs, "I Walk the Line".

In June 2005 crude oil prices surged to record highs eventually breaking the psychological barrier of $60. Walk the Line is a film chronicling the life of Johnny Cash, American country singer, focusing on his younger life, his romance with June Carter and his ascent to the country music scene, with material taken from his autobiographies. It then reversed course and headed to an all time high of $58.28, driven mainly by lingering concerns of a prolonged weak dollar. Johnny Holiday: Carl Perkins. In April 2005 the price began to fall, reaching $53.32 on April 9. Johnathan Rice: Roy Orbison. On March 16, 2005, the price surpassed the October 2004 high of $55.17 to close at $56.46. 'Fluke' Holland.

The price of light, sweet crude oil on NYMEX has been above $50/barrel since March 5, 2005. Clay Steakley: W.S. After retreating for several months during the winter of 2004/2005, prices rose to new highs in March 2005. Dan Beene: Ezra Carter. 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. Sandra Ellis Lafferty: Maybelle Carter. Still others suggest that the main issue is a lack of energy efficiency in industry. Shooter Jennings: Waylon Jennings.

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. Waylon Payne: Jerry Lee Lewis. If these speculators are wrong, current prices may actually be a price bubble, and the price could thus collapse. Tyler Hilton: Elvis Presley. These people argue that speculators foresee increasing demand, decreasing supply, or both, leading to a long term increase in the price of oil. Shelby Lynne: Carrie Cash. 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. Larry Bagby: Marshall Grant.

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. Dan John Miller: Luther Perkins. 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. Dallas Roberts: Sam Phillips. 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. Robert Patrick: Ray Cash. 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. Ginnifer Goodwin: Vivian Cash.

Since oil is traded in dollars, the price must increase for OPEC to maintain buying power in Europe. Reese Witherspoon: June Carter. One other important cause is the United States dollar's slump against the Euro. Joaquin Phoenix: Johnny Cash. The short term price of oil is partially controlled by the OPEC cartel and the oligopoly of major oil companies. Best Actress, Reese Witherspoon. 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. Best Actress, Reese Witherspoon.

Despite this there is increasing discussion of peak oil and the possibility that the future may see a reduced supply of oil. Outstanding Motion Picture, Musical or Comedy. This rate of increase is faster than that of any other date in the past. Outstanding Actress in a Motion Picture, Comedy or Musical, Reese Witherspoon. World supply (specification) came in at 83 million barrels a day during 2004 in department of energy EIA calculations ([8]). Best Actress, Reese Witherspoon. Gas prices in the region, normally 70 cents below the national average, were at $3.12 on August 30.[7]. Best Use of Previously Published or Recorded Music.

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. Best Actress, Reese Witherspoon. market. Best Actress, Reese Witherspoon. 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. Best Actress, Reese Witherspoon. Outside the Middle East other oil producers have worried investors such as the strikes political problems in Venezuela and potential instability in West Africa. Best Actress, Reese Witherspoon.

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. Best Actress, Reese Witherspoon. One of the most important is growing turbulence in the Middle East, the world's largest oil producing region. Best Actor - Musical or Comedy, Joaquin Phoenix.
There are a number of reasons why oil traders feel that oil supplies might be reduced. Best Actress - Musical or Comedy, Reese Witherspoon. Note: the total percentage exceeds 100 because the overall demand from all other countries decreased during the same period.. Best Motion Picture - Musical or Comedy.

Department of Energy Energy Information Administration estimates: [6]. Best Actress, Reese Witherspoon. Sources of the world-consumption-increase in 2004 compared to 2003 (total increase of 3.4%), according to U.S. Best Soundtrack. 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. Best Actress, Reese Witherspoon. economy currently accounts for one-quarter of all demand. Best Actress, Reese Witherspoon.

The U.S. market, the source of an increasing percentage of the world's demand for petroleum. High demand is led by the U.S. .

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

By August 11, 2005, the price had been above $60/barrel for over a week and a half. The price of standard crude oil on NYMEX was under $25/barrel in September 2003. At the same time, Cuba has experienced electricity shortages. These nations must resort to limiting imports or rationing their existing supplies.

Many countries in Sub-Saharan Africa lack the foreign exchange reserves (ie, Dollars) to purchase enough oil products at the ever increasingly higher prices. The Indonesian president had instituted subsidies to control the price of gasoline.[30]. A senior minister of Singapore expressed concern at the oil crisis in Indonesia.[29]. [27] New sources of energy were sought to deal with the crisis.[28].

In the Philippines, the oil crisis caused its public to call for immediate government assistance. combined other non-OECD: 21%. UK: 3.5%. Canada: 4%.

Asia outside Japan and China: 13.8%. US: 19.4%. China: 38.9%.

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