Disaster over oil not quite here.

Despite the perpetual fear-mongering over the state of “fossil” fuels in the world, the Oil market appears to be remarkably stable. Some semblance of a more or less rational market asserted itself in the Sunday trades:

November Brent crude fell 44 cents to $62 a barrel in light trading during a special session on London's International Petroleum Exchange (IPE).
U.S. crude oil fell over $1 to about $63.10 a barrel in electronic trading on the New York Mercantile Exchange ACCESS platform Sunday after tumbling more than $2 a barrel on Friday.

I heard the dire warnings on Friday as I went to work. Gas over $3 a gallon. Maybe $3.50. Planet-wide shortage. Windfall profits.

Fact is on the drive home from work Thursday night I had to go to three gas stations again. First Kroger, then a Texcao, then a BP. There may have been others, but after the first two, I just looked for the sign with the highest price and went there. If I hadn’t been running on fumes, I’d have waited. But a 30 mile commute is a little much for me on a bicycle – I’d rather pay.

For all the mess in the market, at least the market works. There is an upper limit to gas prices, as everyone knows. Or at least should. The only debate is how high those prices are or should be. Between the “non-biological” oil that Russia keeps mining, and the growth of bio-fuels, including E-85 and BioDiesel, there will be more than enough alternative fuels to supply the market if the petroleum market gets very expensive. Some say that we’re pretty much there now. I believe that the premium for bio-fuels is less than a few percent now. And the advantages of the biodiesel are pretty well known, albeit far from publicized.

The hard part is market entrenchment. People are used to buying petroleum products for their vehicles. Once they get past the initial “I’ve never done that before” issue, they make the change. The same thing with the distribution network. It’s the same people, making the same profit. When enough people ask for it, the stations will carry it. All without the “beneficent” government mandating higher fuel costs, or higher car costs.