Posted on 04/17/2006 1:32:48 PM PDT by SLB
CBN.com – (CBN News) - Some believe that the world as we have known it is about to change.
Congressman Roscoe Bartlett (R-MD) is talking about what he thinks could be the biggest challenge in our nation's history.
"The world has never faced a problem like this," Bartlett said.
A huge and sustained increase in the price of oil that would devastate our economy and the world economy, and would force all of us to change the way we live. Why?
It is a phenomenon known as "peak oil." The idea is that oil is a finite resource. There is only so much of it in the ground, and eventually we will start to run out.
One of the leading advocates of this theory is oil industry analyst Matthew Simmons. In his book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, Simmons uses reams of hard geological data to argue that the oil fields of Saudi Arabia -- the world's largest producer -- are in serious decline, and prices for oil at some point will skyrocket.
The quantity and price of oil follows a bell curve. When Saudi oil was first discovered and oil production was growing, the amount of Saudi oil on the market kept increasing, assuring low prices. But at the point when Saudi oil production falls and can no longer meet demand, prices go up.
And because energy-hungry nations like China and India are in the midst of economic booms, the demand for energy is increasing daily, while the supply of oil, if it is shrinking, will make oil scarcer, and much more expensive.
Some of us remember gasoline prices of 29 cents a gallon or less. Today, we have gotten used to gas prices that were once unthinkable. But what if gas prices were $7 a gallon, or more?
Bartlett said, "The peaking may have already occurred. If not now, then very soon. So I think we are probably beyond the point where we can avoid the consequences of peaking. I think what we need to do now is to simply minimize the consequences of peaking. I don't think we have a prayer of avoiding the consequences of peaking."
What is the absolute worst-case scenario from peak oil? A world war over oil supplies. But the less dire economic scenarios are not much better. It would most certainly lead to a deep worldwide recession, or even a depression.
Our economy and way of life has been built around affordable oil. Many of us live in the suburbs. We have to drive to work, to grocery stores, to just about everywhere. We enjoy a high standard of living, thanks to affordable goods and services made possible because of cheap energy.
An oil price spike to perhaps $200 dollars a barrel or more could wreck whole sectors of our economy, like the airline industry, which is already hurting from oil at $70 a barrel. Just think what would happen if airline ticket prices tripled from today's levels!
Peak oil prices would also pour a lot more money into the coffers of some regimes around the world who do not like the United States.
But if there is a plus side to peak oil, it is that unaffordable oil would finally force businesses to invest seriously in developing alternative fuel technologies.
Simmons' book has created such a stir in the energy industry that the world's largest oil company, ExxonMobil, created an ad to dispute it. It says that the Earth still has plenty of untapped oil to meet demand for decades to come.
Myron Ebell of the Competitive Enterprise Institute, a free-market think-tank, said, “At some point, oil production will peak. I think that is a long ways away…In the early 1930s, the Department of Interior estimated that we'd run out of oil by 1940. So there's a long history of predicting these things, and most of the predictions turn out not to be true.”
There is plenty of oil in the ground right here in America, but environmental protection laws prevent us from drilling for it.
Ebell also observed, “There are political obstacles to oil production in many places in the world -- most seriously in the United States.”
But if Simmons is right, America is facing a serious problem that Bartlett warns may now be too late to prepare for. He says we must begin to conserve, and to develop other sources of energy.
“I think this is going to be the overarching problem for the next decade,” Bartlett said. “We will transition from fossil fuels to renewables (renewable energy). Geology will insist on that. It will be a really bumpy ride or a less bumpy ride, depending on how we relate ourselves to it and what we do now.”
And everyone -- from President Bush on down -- knows how much America depends on oil. Bush has said that "America is addicted to oil."
And if the prediction of peak oil is true, America needs to start moving away from oil as an energy source as soon as possible.
General economic collapse. I guess I better stock up on canned goods and shot gun shells now. Do you static analysis, doom & gloom guys ever consider the power of market forces and innovation? No, I thought you didn't.
Hu Jintao, here to meet with Bill Gates, will next visit some key oil producing countries--Saudi Arabia, Morocco, Nigeria and Kenya. China has been negotiating with Canada for more oil, and may already have agreements in place.
Not much snow in the DFW area, yet every other POV is a pickup or SUV. A conversion to the types of vehicles they drive in Europe (where gas costs $6,00 a gallon) would cut fuel costs greatly. As would also the construction of
homes on sites closer to places of employment. But None of this should be imposed by government. They would not know how to do it without adding pain.
I doubt that we will get to the point of 1931. In any case, we can always go the imperial route. Plenty of reserves in Mexico and Venezuela.
Gas here in Spain is $7.44 an American gallon and we are not the dearest in Europe.
I guess you will be really screaming at Bank of America and their 31% profit margin. And Yahoo's 36%...and Microsoft's 32%..and Oracle's 23%
fwiw-
I guess you will be really screaming at Bank of America and their 31% profit margin. And Yahoo's 36%...and Microsoft's 32%..and Oracle's 23%...
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No, but there is one HUGE difference. Our entire lifeblood and economy is built on oil. Those other guys, and the things they provide are OPTIONAL. Oil is not an option. It is critical. There are differences, that many try to rationalize away. No one is denying the oil companies, how ever many there are really left now, a fair and good profit. If oil and its byproducts were not so critical to this nation, it would not be such a sensitive impact point.
Answer the following:
Is housing optional?
Is food and water optional?
Are cars optional?
Would you like me to post some profit margins of food companies?
How about some water companies?
Sorry but you are talking like a socialist.......
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Nice try. End of discussion.
How do you define "fair and good" in this case? If the profits the oil companies obtain now are unfair, what level should they have?
Listen...look at what I said....please. I said you, were TALKING like a socialist....not that you WERE one.
I know exactly where you are coming from....but you are incorrect.
And if you don't want to have a debate about it...I guess I win. LOL!!
Sorry for the long delay in responding. I was trying to gauge other responses.
Many seem to feel that the run-up in prices is due to market manipulation and political fears and troubles. Those things certainly play a part but the basic trend now seems clear - demand is increasing faster than supply...and there's no reasonable expectation of any turn-around in the near (or medium) future. Simmons is right and Yergin wrong.
Is it possible to mitigate the damage? Perhaps. The crisis is mainly in transporation. Technically it is possible to wring an awful lot of inefficiency out of the system. But politically? I see no sign that anyone is willing to give up anything. Americans refuse to give up the freedom their cars give them. Chinese and Indians refuse to limit their economic growth in any way. And the rest of the third world is consumed with jealosy and anger and too stupid to think beyond that.
I'll be glad to continue off-line if you have anything further to offer but I'm not privy to the thinking of our leaders and can't imagine how they plan to handle this long-anticipated crisis.
If your brain was as big as your mouth you'd have sense enough not to answer your own questions.
There is enough natural gas off the CA coast to heat every home in the US for 50 years. ....we are not allowed to drill it.
Shhh, Eagle. He's on a rant typing furiously on his PC powered by price regulated electricity. Don't ask him what a fair price is that he's willing to pay for electricity. ;-) OB1
Its hard to pull a flatbed with a tractor on it in a Yugo
or a 4 horse trailer in a Prius. I do however commute to
my day job in FW on my motorcycle.
It is "easy" to carry a stack of boxes on a flatcar. Part of the problem is that we pulling up too many miles to railway. Many had to go, but was't much long term planning in letting so much go. Iac, the Germans rely more on rail and less on long-distance trucks. Has the added benefit that Autobahns don't cost as much per mile as an interstate type road.
Ignore the blaming and conspiracy theories and this is a pretty good board covering the current situation. What is Yergin's reply to the latest news? I haven't been able to find it...or Simmons response, either.
Hard to believe oil was at $12/barrel in the late '90s. How could that be? The basics haven't changed that much. Is manipulation really that important, are markets that unreliable?
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