Peak-oil? More like Peak-gas

Everybody talks every once in a while about the much feared Peak-oil, but what we are suffering right now is a different phenomenon. We are seeing gas prices go through the roof worldwide, matching or even exceeding the record prices posted on the summer of 2008 when the Brent crude hit the 145$/barrel mark. 

Since then we have grown accustomed to high gas prices, fueled (pun not intended) by consecutive cuts in production from the OPEC and political conflicts around the world. However, even if we take these factors into account, the demand has fallen so abruptly due to the economic crisis than the barrel price is steady at 85-91$/barrel. The problem is that actual gas prices are not following the price of the oil they come from. But a picture is worth a thousand words:

$/barrel VS $/gallon from 01.01.2008 to 12.27.2010 (All data from US Energy Information Administration)

As everybody can see the red line (US dollars per gallon of gas) used to follow closely the blue one (US dollars per barrel of Brent crude oil) until the end of 2008, and that would be the normal, expected behavior. Since then the differences have grown up, taking us to today's situation when the price per gallon is higher than it was when a barrel was worth 100$. The problem is the barrel costs now 90$, not 100$! 

If we do the same comparison in Europe the matter is even worse. I will try to show the same graph, although things are a bit more complicated to analyze in Europe due to different taxation among countries and the recent wave of tax raises that has plagued Europe. This time I will plot the price per barrel against the Euro-Super 95 (Unleaded petrol) price per litre. Keep in mind this is a weighted average for all the eurozone:

$/barrel VS €/litre from 01.01.2008 to 12.27.2010 (All data from European Comission Energy Market)

In the case of Europe the price per litre as of today (1,425 €/litre) is the same it was when the barrel was 125$ in summer 2008, but the barrel is now 90$. A difference that is very hard to digest for the final consumer, even more when the euro is now stronger against the dollar than it was back then.

Where do the profits of this price difference go? The answer is very simple: Oil companies. Oil companies who have earning forecasts to fulfill , dividends to deliver, stockholders to keep happy... I know, they are just doing their part as a business, and they are using their power to do it quite well, but they cannot keep playing this game forever. If the crude goes up, and it is expected to go up in 2011, they cannot follow this pace and take gas prices to 4$/gallon or 1,80 €/litre. Doing this will take us to the point where sectors that are totally oil-dependent like transport and distribution would have to translate this rise in gas to their final prices. This would further depress the economy, just when you thought things were getting slowly better... 

Keeping gas prices tied to the commodity they come from should not be a matter of solidarity from oil companies with the rest of the economy, it should be a matter of sanity, a matter of not strangling your own clients. 

Everybody knows oil demand is quite inflexible as we live on it: we travel on it, we transport things on it, we heat and light our houses on it, we produce on it... but everything can break if you stress it enough. Oil companies should not hurt the hen that lays the golden eggs.