The final days of 2008 experienced light trading that caused a $5 increase in the price of crude oil per barrel. This week the sweet crude delivery for February rose to above $40.02 which has been the first time it has crossed to $40 mark in New York. Nymex will however be closed for the New Year on Thursday. On the other hand retail gasoline prices were constantly declining till Monday and ended up at $1.60 per gallon. 

The Israeli attacks on the symbols of Hamas power on the Gaza strip have been described as “war to the bitter end” by the Israeli defense minister. In the three days of Israeli attacks a total of 364 Palestinians have been reported dead and 1400 others wounded. The current attacks on the Gaza strip have been the worst attacks witnessed by the Palestinians in decades. The attacks were initiated by Israel in retaliation to the rocket firing by Hamas that followed after the six month truce came to an end. 

Israeli missile strikes targeted the home of the Hamas premier and also managed to destroy a security compound situated inside a university building. 

The hiked up oil prices were described by Phil Flynn of Alaron Trading Corp as “an emotional reaction to what was going on in Israel.” Such unusual price hikes have been experienced during previous fighting in the region.

Fylnn said “In reality, the likelihood the conflict is going to interrupt oil supply in any way; shape or form is highly unlikely, obviously, if the conflict widens, and other countries get involved directly, you might have a different situation.” 

China indicated an interest in going on a mass crude buying spree in order to take advantages of the prices below $40 a barrel. China is adamant on increasing its oil reserves in order to safeguard itself against the supply shock which seem inevitable at the moment. The Chinese government has urged local companies to take advantage of the current prices and load up on oil reserves because prices are likely rise in the near future.

Experts have analyzed that the consumption of oil will stagnate for a long time to come. The predictions estimate that the consumption of oil is not likely to increase anywhere in the near future all the way up to 2030 due to improved energy efficiency.

Reports from the Energy Information Administration said that the rate in growth of energy consumption has slowed down as compared to last year. There has also been a 3% growth in the use of renewable energy which includes biofuels such as ethanol, wind and solar power.

This is bound to affect the dependency of the United States on foreign oil. Today liquid fuel imports to the U.S account for 58% percent which is expected to go down to 40% by 2025.

Cars that are running on gasoline will further contribute to the decline in the demand for oil. By 2030 around 38% of the cars on the streets are expected to be of the gas-electric hybrid breed. This is a sharp expected increase compared to the 2% that gas-electric cars presently constitute for.

The current economic problems have seen the price of oil fall from a staggering $147 last year to below $50 this year. Oil prices are likely to bounce back provided the US manages to get itself out of the current economic problems. By 2030 the price of oil is expected to rise up to $189.

The fuel efficiency has not come about as a result of a change in the rules and regulations that force companies to produce equipment that emits a lesser amount of carbon dioxide. On the contrary the developments have come about by self driven manufacturers that aim to produce advanced energy efficient technologies.

Energy consumption is bound to increase in the coming years but the source of that energy is likely to change. Sources such as solar energy, wind, hydro energy and geothermal energy will bring down the importance of oil in the future.