Oil price realities ("we're NOT all doomed" alert)

Sure, I know that some people are employed by oil companies. Most aren't, but some are. Most of my hatred for the industry is for OPEC nations who keep oil in short supply in order to drive up prices. But if you want to talk about the companies themselves, fine. I'm sure you do buy a lot of materials. But that pales in comparison to what the high price of energy is going to do to the economy eventually. Also, these energy prices are crippling people in my area. It's not just gasoline, it's natural gas, too. We have seen our bills more than double since 2000. People I know keep their houses in the mid 60s all winter long. True, I live in an area that's not well off. It's a small town. Most of us live there because the house prices are much lower than the city and there's not much crime. But we still have to work there. It might be a choice, but it's one that we have no control over.

So yes, I would like to see the fossil fuel cartel of nations rendered powerless by a cheaper fuel that is readily available. I'm sure the oil companies are profiteering, but I don't have a problem with capitalism. And I won't have a problem when the market comes up with an alternative that sends the oil industry down the tubes.

There's two sides in this conflict.

One side usually feels angry and sad and takes the position that if they see anyone else that's happy it must be because happiness (or the cause of happiness) got stolen. These sad angry people decide that the only reason that nobody else wants anything to do with them is some kind of conspiracy. Of course the real reason is that these sad angry people are dangerous.

The other side of the conflict are people happy with a lot or a little, and what these people really like is working hard and doing good. When this group buys and sells things they make big profits because others trust them.

I know this is simplified down but I'm talking about a problem we all have of keeping track of what side we're on. We got to remember that it's just not healthy to covet other peoples oil or stuff. There's no benefit to be gained by hating others or wanting bad things to happen to them.

If it's really true that the oil companies are making huge profits, than anyone can buy oil company stocks. At the moment I'm checking out REM, UNT, FTO, PTR, CRK, SGY, and NBL. REM is my favorite-- it's up 20% so far this year. You can buy a share for about $30, (plus maybe a $5 commission depending on who you hire for a broker). If more people bought oil stock then these oil company borrowing costs would go down and they could afford to lower the price of their oil, increase market share and make bigger profits and the bidding on their stock will soar.

The price will never go down with demand greater than the supply. And no matter how high they raise it, demand still keeps increasing. I would like to see demand go way down through another fuel. The only other way it's going down is if we discover the earth has a reserve the size of the Atlantic, or if the whole country stops driving, flying, or heating their houses.

Most people around here have no extra money to invest. Except this one guy who won the powerball jackpot the other day. Seriously. I think I might have gone to high school with him. He won $20 million, so I guess he's not going to worry too much about gas for a while.

We are consumers too.

I work for the oil companies in this sense: I am a consulting geologist. I do wellsite work, and when they are not drilling I don't work.

I'm getting a little gray around the muzzle to fill in doing construction work in the hard times, and few want to hire someone they know will be gone when the price of crude goes up in a year or two. What can be boodled up in the good times is usually consumed in the crunches. This leaves little for a retirement portfolio. (Come on, powerball!(8^D))

I'm not sure where you are, but I also heat with natural gas, and I live in North Dakota. We can only use the fireplace (house built in 1912) when the weather is warmer in the fall and spring, or the infiltrating air will cause a net heat loss (winter temps commonly reach -30F). Vehicles have to be plugged in at night during the winter to keep the engines warm or engine damage can occur during startup.

In summer, we seldom use air conditioning except in years when the temps get into the high '90s and above (our summers tend to be fairly extreme too).

The real wonder of it all, is that few people realize that oil goes to more than just fuels. Plastics, synthetic fabrics, numerous chemicals, asphalt, many cosmetics, parafin, etc. are all derived at least in part from petroleum, even some pharmaceuticals. (Buy a tube of topical antibiotic ointment--the base is petroleum jelly).

Even if oil were to cease to be a primary energy source, we would still need it.

While increasing global demand is a factor, part of the reason there is a shortage is that repeatedly in the last two decades, the industry has suffered major price collapses, with the loss of people and infrastructure. While little drilling occurred during the lean times, reservoirs continued to deplete, and we come up short later. I hope the market can equalize and stabilize (at whatever level) for a while, just so we can catch up.

As oil prices stay up or continue to rise, the alternate technologies you wish for will be further developed and become more economically attractive, which will help alter the demand side of the equation. But a collapse will only mean that the other technologies will be either set aside or in such demand that their prices will be prohibitively high for quite a while (especially initial capital outlay). Heat pump (shallow geothermal wells with heat exchangers) can greatly reduce heating costs (and cooling), but the buy-in is too much for many folks, even though the savings will be great down the line. Phased in development is probably best for all concerned.

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