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.
No, just a free market economy with more players bidding up the price of a diminishing product. And, yes this is a great board for trading information.
Whose property would you steal to build these rail systems upon?
BTW everything you have said I agree with. Supply and demand, really does work...man made concept of "survival of the fittest"...
""A huge and sustained increase in the price of oil that would devastate our economy and the world economy"
Well then the price of oil would fall wouldnt it?
Guess old Patsy Robertson doesnt understand the demand side of supply and demand
""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!""
These people are truly idiots..if oil went to $200 per barrel, most airlines would go under but those that survived would survive in an environment with much lower capacity of ASMs, thus allowing them to raise fares to cover the $200 oil. Also sitting down 1/2 the nations airfleet would itself reduce demand substantially.
""Just think what would happen if airline ticket prices tripled from today's levels!"""
It may help that idiot to know that airline fares just to keep pace with inflation since 1978 would probably have to triple.
I have a 1973 OAG at home with schedules and fares. a transcon flight then cost about $200 OW. That would be equal to about $800 today. Yet you can fly JetBlue on a transcon today for about $150 OW easily. So Tripling fares to $450 for a average transcon ticket would still be well below 1973s price.
if the high oil prices are because of high demand and not a supply shock, youre wrong.
actually that gas at 28 cents per gallon along with cars getting 10 mpg at best, you were spending a much larger share of your income on gas than you do today.
""Hard to believe oil was at $12/barrel in the late '90s. How could that be?""
Duh!!!
Maybe it was because every nation in asia saw their GDP fall by 10% or more from 1997-99 while at the same time OPEC was increasing production.
Fantasy. If we stopped using gasoline tomorrow, it wouldn't change the big picture of petroleum consumption vs production.
Why is it everyone in this country sees gas consumption as the boogy man in the crude oil story? A barrel of crude can (more or less) be cracked into fixed percentages of petroleum derivitive products. IOW, the part that becomes gasoline is basically unusable as some other product. If you use less gas, that portion of the barrel cannot be then turned into heating oil. When 60% of the US is blocked from oil/energy exploration, particularly when some of that area is extremely fertile for energy, the problem is inevitable.
There is no shortage of oil, simply the political will to allow it to be harvested.
Repeat after me, the United States government is the boogyman here.
You're right. I'd forgotten.
I paid $3.20 per gallon yesterday to fill one of my Harleys.
"You can make oil out of turkey guts."
Ok....but then we would worry about "oil flu".
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.
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Are you saying that the market forces are benign? Because I contend that the market is ruthless and unfeeling, and is capable of creating severe hardship to any society that doesn't respect the power of these forces.
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