Peak Oil Is Happening As You Read This. Yes, the price of oil is at $125 per barrel and gas (gasoline) is over $3.95 per gallon. What's that you say? "These prices are too high. The market won't support them. The prices of oil & gas will start dropping soon."
Or maybe you say "The oil companies are holding oil and gas off the market. It is all a conspiracy! When the price gets right, they will bring new supplies into the market place. Everything will then return to normal."
Or, worst of all, you say "Ethanol will save the day. Our corn farmers will save us. We'll grow our way out of the energy crisis!"
Alternative Energy To The Rescue. If any of the above or similar lines came from you, don't feel too bad. Most of us have been at least partly wrong on the energy crisis. I will admit I was wrong. Even as evidence mounted that peak oil was real and that we were in a heap of trouble, I kept thinking that it really wouldn't happen. In the end, something would save us. In my case, I thought alternative fuels would be the the hero who would rescue us.
I never believed in the ethanol craze. Being a chemical engineer, I had seen the calculations long ago that showed you couldn't produce ethanol from corn and use it for automobile fuel and make a genuine profit. A large government subsidy was necessary. (See Time for the truth about ethanol and some of the biodiesels.)
So, I didn't believe in ethanol but I did believe in solar energy, fuel cells, geothermal energy, hybrid cars, bottom-of-the-ocean methane hydrates, etc, etc, etc. Like I said before, I just knew something would save us. I thought the most likely savior was alternative energy.
And, believe me, I still believe in alternative energy. It can do the job (hopefully). The only problem is that we are getting a very late start and decades are going to be required to get a solid alternative energy program up and working..........and that is after we decide which alternative energy sources may work and which ones will not work.
Additional Price Increases For Gas. As we await development of alternative energy sources, be prepared to live with some additional major price increases at the pump for gas. Also, be prepared for global warming to accelerate as we run out of the high-grade, cleaner fossil fuels and turn to the lower-grade, dirtier fuels, e.g. coal, heavy oil, shale oil, oil sands, etc, that emit more noxious combustion gases. Even though these lower grade fuels are undesirable compared to the fuels we have been using, their cost will be even higher than the good fuels due to higher extraction and refinery expenses. We have no choice but to pay more for the dirty fuels. We are running out of the higher grade fuels! The good stuff is gooooing.......gone!
How High Will Oil & Gas Prices Go? The projections I have seen from the so-called oil experts are that we will, in the near two or three years, see oil prices at $180 to $200 per barrel. This would transmit into gas prices of at least $5 or $6 per gallon. Of course, other factors than supply and demand enter the picture. For example, if a so-called tax holiday for gas is put in place, prices will likely first dip and then rise sharply, as the temporary lower price lulls the drivers into thinking the worst is over and allows them to leave their motors running while they are grocery shopping.
However, I think reason will prevail and the tax holiday will not take place. Even poor, dumb George Bush is against it! In that event gas prices should rise to an average of slightly over $4 per gallon by the time this summer is over and, possibly, to over the $5 level by the end of summer 2009. These are the projections of an amateur (me), but I have not been impressed with how far the whiskered oil experts missed the present oil & gas price rise. I don't trust the oil experts! Remember, many, if not most of the official experts tend to be conservative on price increase estimates because they are obligated by pressure back at the office to put the industry's and federal government's best foot forward (translation: they are playing with your head!). Take my word, prices will be higher than forecast.
Remember the last energy crisis late in the past century.....images of men and women fist-fighting at the pumps keeps popping back into my memory. Remember "topping out the tank".....I was guilty of that! If this panic occurs again, Katie bar the door on prices. But, maybe before panic strikes, we will have some leadership back in Washington and such disasters won't occur. But, no matter what happens in Washington, you are looking at substantial oil & gas price increases over the next few years.
What Can We Do To Prevent Catastrophic Oil & Gas Price Increases.
O.K., so you don't like the scenario that I've laid out for the U.S. and the world regarding oil and gas prices. What can be done? Here is my plan:
1. Get Rid of Energy-goofy Politicians. All politicians who favor gasoline tax holidays, ethanol subsidies, no drilling off Florida, California, & the North Slope, and punitive legislation toward the oil companies have to go. Hillary Clinton with her blatant appeals to the unwashed masses regarding the proposed gas tax holidays is the first name that comes to mine. John McCain is close behind because he suggested the gas tax holiday in the first place and even though he fought the ethanol subsidies back when he had good sense. President Bush has to go because this crisis is happening on his watch and the incompetence of his administration has added greatly to the problem. Send Bush back to his goat farm in Crawford, Texas. Cheney has to go because he knows more about the subject than the others mentioned above and, instead of working for a rational energy program, has led the nation to war in an attempt to take other folks oil away from them.
Any rational energy program has to wait until the Bush administration is out of office and Hillary is safely back in the Senate. Otherwise we might get another Brownie running the program. No more of a president's drinking buddies running things!
Maybe Obama can stay. At least, he is against the gas tax holiday and has even ridiculed it. If Obama were to really put together a rational energy program, he would be the man we need.
I hate to emphasis the political angle so much but, until we can get enough sensible people in congress and in an administration that hasn't completely whored themselves out, we can't have a energy program that will work.
2. Government-run National Energy Company. A government-run national energy quasi-company should be set up in the U.S. to handle the tough programs that U.S. private companies are too controversial to handle. The national company would handle the following specific programs:
a. Drilling and developing Anwar
b. Drilling off Florida and California coasts
c. Work with Canada to build a huge pipeline to bring natural gas from the Arctic into the U.S.
d. Coordinate with Mexico to rework their rapidly deteriorating oil industry. Provide financing if necessary.
e. Work with Brazil (if needed) to develop their huge new offshore Carioca oil strike.
f. Work with Russia (if requested) to rework their massive but static oil and natural gas industry.
g. Work with Cuba to develop their (rumored) very large offshore oil strike.
h. Explore in world areas where the private oil companies are hesitant to go. Even if a dictatorship or unfriendly country benefits. In the long run, we will also benefit.
i. Perform intensive research on producing a clean liquid fuel from coal.
j. Coordinate but not dominate alternative energy development (discussed below).
k. Coordinate energy efficiency efforts related to transportation.
The national company would not interfere in the affairs of the private oil companies or compete with them. I have been very impressed by the success of several of the government-run oil firms of other countries, notably Petrabras of Brazil. Lets copy their success. And allow no Brownie to run the show!
3. Ethanol Subsidy - Goodby! The ethanol subsidy has to go, immediately! Period! No slow phase-out! No nothing! Sorry, corn farmers. If you can't raise corn at a profit without a subsidy, grow something else or find another line of work.
4. Alternative Energy Development. The national firm would coordinate government efforts in developing alternative energy sources. But, until a workable alternative energy source(s) becomes obvious, there will no government mandates as to which energy source is the way to go. No Manhattan-type programs based on false assumptions! No more ethanol-type mistakes! We can't afford them. And we have to be aware that years or even decades may be necessary for us to go to a alternative energy source for the bulk of our energy supplies.
Happy drilling and happy searching for clean energy sources!
1. Oil & Energy Company Stocks. Someone is going to make money off the arrival of peak oil and the energy crisis. It might as well be you.
2. Bakken Formation Oil. The hottest oil play going at this time in the U.S. If even a small amount of the reported total oil contained in the formation is recoverable, our dire oil shortage will be slightly relieved. If............
3. Alternative Energy - Solar, Ethanol, Biodiesel, & Wind. We desperately need the renewable alternative energy sources but are they really available in volume? Can we produce ethanol without a government subsidy?
4. Germany in World War 2. The German side of World War 2. Germany had their own energy crisis to deal with in World War 2.
Oil and gas prices will continue to rise at a rapid rate as we run out of high grade oil and have to turn increasingly to lower grade oil. The rapid rate of price rise could accelerate if consumers panic as they did during the past energy crisis. A government-run oil company is recommended to be set up to perform tasks the private oil companies can't do without controversy. Serious recommendations are made for improving the conventional oil, gas, coal, and alternative energy sectors to prevent a catastrophic increase in oil & gas prices.
Updated: 07/02/08
Contact me @ vanc13@cox.net
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