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The Bad News at the Pump
The $100-plus Barrel of Oil and What It Means
On Monday March 3, the price of crude oil reached $103.95 per barrel on the New York Mercantile Exchange, surpassing the record set nearly 30 years ago during another moment of chaos in the Middle East. Will that new mark prove distinctive in the annals of world history or will it be forgotten as energy prices drop, just as they did following their April 1980 peak?
When oil costs are plotted over time, the 1980 oil crisis -- prompted by Ayatollah Khomeini's Iranian revolution -- stands out as a sharp spike on that price curve. Both before and after that moment, however, oil supplies proved largely sufficient to meet rising global demand, in part because the Saudis and other major producers were capable of compensating for declining Iranian production. They simply increased their output substantially, dumping a surplus of oil onto the global market. Aided by the development of new fields in Alaska and the North Sea, prices dropped precipitously and stayed low through the 1990s (except for a brief spike following the Iraqi invasion of Kuwait in August 1990).
Nothing similar is likely to happen now. For the present surge in prices -- crude oil costs have risen by 74% over the past year -- no such easy solution is in sight. To begin with, we face not a sudden spike, but the results of a steady, relentless climb that began in 2002 and shows no signs of abating; nor can this rise be attributed to a single, chaos-causing factor in the energy business or in global politics. It is instead the product of multiple factors endemic to energy production and characteristic of the current era. There is no prospect of their vanishing any time soon.
Three factors, in particular, are responsible for the current surge: intensifying competition for oil between the older industrial powers and rising economic dynamos like China and India; the inability of the global energy industry to expand supplies to keep pace with growing demand; and intensifying instability in the major oil-producing areas.
A Tsunami of Energy Needs
The crucial role of the developing economic dynamos in Asia on the global energy market was already evident as this century dawned. With their phenomenal rates of growth, these countries must have more oil (and other forms of energy) to power their expanding industries, fuel their new cars and trucks, and satisfy the aspirations of their burgeoning middle classes. According to the U.S. Department of Energy (DoE), combined oil demand from China and India, already at 8.9 million barrels per day in 2004, is expected to hit 12.1 million barrels by 2010 and 15.5 million barrels by 2020. These are staggering rises. If you include anticipated consumption by Brazil, Mexico, South Korea, and other rapidly industrializing nations, demand from the developing world is truly expected to soar.
To this tsunami of new energy needs must be added an already high level of consumption by the mature industrial powers led by the United States, the European Union, and Japan. This shows little sign of lessening, which means we face an unprecedented surge in the total demand for oil. According to the DoE, combined world oil consumption, which reached 83.7 million barrels per day in 2006, is projected to hit 90.7 million barrels in 2010 and 103.7 million in 2020. We're talking about an increase of 20 million barrels per day in just 15 years. To achieve this would require a mammoth, unbelievably costly effort on the part of the world's giant oil companies (and their lenders and government backers), and even then it might not be possible.
American consumers, facing gas-pump hell, are, at the moment, being further punished by the fact that most global oil transactions are denominated in dollars. Given the declining value of the dollar relative to other currencies, we wind up paying more per barrel than competitors who can convert their euros, yen, or other strong currencies into dollars before bidding against us on the international energy market. Global investors, sensing the trend, are dumping the dollar for these other currencies or buying oil futures, only adding to the slide of the U.S. currency and the rising price of crude.
A Tough Oil World
Lurking behind soaring demand is another crisis entirely -- a crisis of production. The energy industry is now in the difficult process of transitioning from a world of easily tapped oil supplies to one in which mainly tough-oil options prevail. Those "easy-oil" supplies are the ones we've long been familiar with: the giant petroleum reservoirs in friendly, stable countries that provided most of the world's oil during the formative years of the Petroleum Age, stretching from the late nineteenth century until the Arab oil embargo of 1973.
These mammoth reservoirs include Ghawar in Saudi Arabia, Burgan in Kuwait, and Cantarell in Mexico -- monster fields that produce hundreds of thousands or even millions of barrels of crude per day. In the last quarter-century, however, discoveries of "elephant" fields like these have been almost nonexistent. The world is, as a result, becoming increasingly dependent on smaller fields, often in remote, unwelcoming locations that require far more expense to develop and bring online. This, too, is adding to the price of oil.
As an illustration of this trend, take Kashagan, a giant oil field discovered in 2000 in Kazakhstan's sector of the Caspian Sea. It represents the single largest discovery worldwide in the past 40 years. Although it does harbor significant reserves of oil and gas, the field poses staggering challenges to the international consortium of energy companies attempting to develop it. It contains, for example, high concentrations of poisonous hydrogen sulfide gas, which makes its development using conventional (and so cheaper) production technology impossible. Development costs to bring the field online have already soared from an estimated $57 billion to $135 billion with no end in sight. In the meantime, the projected date for the start-up of production at Kashagan has been continually pushed back. Once expected to come online in 2005, it's now slated for 2011 -- at the earliest. This, in turn, has led a frustrated Kazakh government to demand that the state-owned KazMunaiGaz energy company be given a larger stake in the field's operating consortium.
Most of the other big discoveries of recent years -- the "Jack" field in the deep waters of the Gulf of Mexico, the Doba field in Chad, fields off Russia's Sakhalin Island, and the Tupi field in the deep Atlantic off Brazil -- exhibit similar characteristics. They are either far offshore and difficult to develop or entail problematic relationships with unreliable governments -- or, worse yet, some combination of the two. You can essentially do the math yourself when it comes to the future cost of oil produced at such sites.
So here's the bad news at the pump: The inability of the global energy industry to keep pace with rising demand is only likely to become more pronounced as, in the years ahead, the world reaches maximum sustainable daily petroleum output and commences what just about all energy experts now agree will be an irreversible decline. No one can be sure when exactly this will occur, but a growing chorus of specialists believes that we are moving ever closer to that moment of "peak" oil output -- with some specialists placing it as soon as 2010-12.
Oil as a Conflict-producer
Finally, let's not forget that the equivalent of the Iranian Revolution of 1980 remains with us. The oil heartlands of the planet are increasingly in crisis and the price of oil is regularly driven up by that as well. Iraq, with the world's second largest reserves of petroleum, is convulsed by war. Nigeria, a major supplier to the United States and Europe, has experienced a significant reduction in output recently due to ethnic violence in the oil-rich Niger Delta region. Venezuela's production has fallen because many anti-Chávez oil technocrats have been purged from the state-owned oil monopoly PdVSA. Iran's output has suffered as a result of the economic sanctions imposed by the United States. Political violence, corruption, and state interference in the energy sector have also led to depressed output in Chad, Mexico, Russia, and Sudan.
At one time, the world's major oil producers could compensate for a downturn in output in any area by ramping up production from the "spare" (or reserve) capacity at their disposal. This was critical in 1990, following the Iraq invasion of Kuwait, and again in 2001, following the attacks of 9/11. Both times, Saudi Arabia simply upped production, adding hundreds of thousands of barrels per day in spare capacity, thereby averting a catastrophic energy crisis in the United States. But the Saudis and the other members of OPEC no longer possess significant spare capacity. They're pumping oil for all they're worth in order to benefit from the current surge in prices. Hence, any sudden loss of production in conflict-torn areas translates quickly into rising prices.
Can we expect the levels of conflict in oil-producing regions to subside sooner or later, bringing prices down? Unfortunately, this is a wholly unrealistic prospect because oil production itself increasingly acts as a goad to conflict. While extracting petroleum generates enormous wealth for privileged elites, it leaves others in many countries, usually of a different ethnic or religious identity, with few benefits from the resource in their midst. Take the Niger Delta area, where ethnic minorities continue to fight to obtain a larger share of oil revenues that historically have been monopolized by elites in the distant national capital, Abuja. The Kurds in Iraq have similarly been struggling to take control over the oil revenues generated by the giant fields in portions of that war-ravaged country they claim. This threatens to turn the oil-producing city of Kirkuk, in particular, into a future battleground.
While no one can predict just where the next conflicts will break out over the allocation of oil revenues or the control of valuable oil fields, it is safe to predict that such conflicts will remain an abiding, price-hiking feature of the global political landscape. Instability is now not only the norm, but spreading in these areas, and high oil prices are an inevitable corollary.
An Energy "Black Monday"
The bottom line: Oil prices are high today not, as in 1980, due to a temporary disruption in the global flow of petroleum but for systemic reasons that are, if anything, becoming more pronounced. This means news headlines with the phrase "record oil price" are likely to be commonplace for a long time to come. The only good news may lie in just how bad the news really is. Sooner or later, ever rising energy costs are likely to push the United States and other oil-consuming nations into deep recession, thus depressing demand and possibly beginning to bring energy prices down. But this is hardly a recipe for lower prices that anyone would voluntarily choose.
What, then, will be the lasting consequences of higher energy costs? For the ordinary American consumer the answer is simple, if grim: A diminished quality of life, as discretionary expenses disappear in the face of higher costs for transportation, home heating, and electricity, not to speak of basics like food (for which, from fertilizers to packaging, oil is a necessity). For the poor and elderly, the implications are dire: In some cases, it will undoubtedly mean choosing among heat in winter, adequate nutrition, and medicine.
Finally, there are the implications for the United States as a whole. Because the U.S. relies on petroleum for approximately 40% of its total energy supply, and because nearly two-thirds of its crude oil must be imported, this country will be forced to devote an ever-increasing share of its national wealth to energy imports. If oil remains at or above the $100 per barrel mark in 2008, and, as expected, the United States imports some 4.75 billion barrels of the stuff, the net outflow of dollars is likely to be in the range of $475 billion. This will constitute the largest single contribution to America's balance-of-payments deficit and will surely prove a major factor in the continuing erosion of the dollar.
The principal recipients of petro-dollars -- the major oil-producing states of the Persian Gulf, the former Soviet Union, and Latin America -- will undoubtedly use their accumulating wealth to purchase big chunks of prime American assets or, as in the case of Hugo Chávez of Venezuela or the Saudi princes, pursue political aims inconsistent with American foreign policy objectives. America's vaunted status as the world's "sole superpower" will prove increasingly ephemeral as new "petro-superpowers" -- a term coined by Senator Richard Lugar of Indiana -- come to dominate the geopolitical landscape.
So, while March 3 may have only briefly made the headlines here, it may well be remembered as the true "black Monday" of our new century, the moment when energy costs became the decisive factor in the balance of global economic power.
Michael T. Klare, the author of Resource Wars (2001) and Blood and Oil (2004), is a professor of Peace and World Security Studies at Hampshire College in Amherst, Mass. His latest book, Rising Powers, Shrinking Planet: The New Geopolitics of Energy, will be published on April 15th by Metropolitan Books.
Copyright 2008 Michael T. Klare
96 Comments so far
Show AllAs the price of oil continues to climb the oilo-based economy slows. Barring a temporary moratorium on price increases at the pump, this is bound ot hurt the repugs at the polls making the selection harder for them to steal.
AMerica has insisted on big cars and over consumption so they too have some of the responsibility. I never had a gas guzzler and haven't even had a car since 1993 and life has been fine. Part of me is happy to see the SUV owners suffer.
Though BushCo may not like it, our national interest dictates improving relations with Iran, whether or not they get the bomb. That's assuming Iran isn't really interested in carving out it's own empire in the Middle East once we pull out.
Don't count on oil prices being a shoe-in for the Democrats. The neocon propaganda machine successfully revises history as fast as history is being created.
Next neocon talking point: if those Democrats would have let us drill on federal land throughout the western states, including ANWR, the price of oil would not go up, and the US could have paid for an invasion of Iran by selling off their oil.
Somebody needs to ask Hillbillary and Obama how soon after they are inaugurated they will fire Ben Bernanke. Every time he lowers interest rates, the price of oil rises. His only future strategy is to further cut interest rates.
Nationalize Exxon et al!
For the same price as one year of military spending in the U.S., the government could GIVE every family (100,000,000) in the country a new SMART car that would reduce our oil consumption by two thirds overnight. This means we wouldn't need to import oil anymore, while reducing the price of oil (albeit temporarily!) globally. Most importantly, it would mean that a few, wealthy elites would no longer wage war abroad in the name of 'our national interests'.
Meanwhile diehard poor Republican sympathizers back the War Party for tax cuts and subsidies to companies like Exxon because that 40 billion dollar profit trickles down (yeah...right!) to the consumers while providing 'incentive' for our capitalistic classes to go into business and create jobs. Such a large portion of the American electorate believes this crap thereby further hindering any chance to rein in this unbalanced state of affairs.
I have a friend who lives on a tiny hobby farm. He has a windmill generator, which converts water into pure hydrogen gas. In turn this gas powers his car and heats his home producing no pollution or green house gases. The government is waging war against him through a series of fines, regulations and by-laws. Shouldn't a progressive government embrace his innovations and independence?
The Bush policies are regressive, short sighted and dangerous. Our president only uses the big business playbook and in return the U.S. will suffer more than Japan or Europe when the "end of the oil era" arrives. Meanwhile none of the current presidential hopefuls will even dare to speak out against Big Oil or the military industrial complex used to support this bizarre state of affairs.
andrsdl mentions the elephant in the room! Helicopter Ben has hit a gusher of dollars, and in their abundance, demand for them is going down. Compare oil prices with other stuff, you can see a big part of what's going on is not just the oil going up, but the dollar going down.
Ben's not doing this to be mean, by the way, if the printing presses don't keep printing, worse things would happen than just a little hyperinflation.
If I were an oil producer, I would want a U.S. President that more than triples the price of oil in less than 7 years. Mission Accomplished!
We should have been looking for an alternative power source for our cars/planes since the 1st crisis in the 70's. People, I ain't talking Ethanol or fucking Crisco here either. In the past we could marshall our resources (academics, scientists, private sector people etc) to solve a problem. Think the Manhattan project, project Apollo or dozens of modern day problems we faced in THE PAST. Now we can't take a shit without talking "privatization" in the same sentence.
The future of the U.S. military is assured.
For the rest of us - my money is on the people who learn how to be as self-sufficient as possible. It's what smart people have been doing all along.
well well well, another article that talks of the problem, but no real solution is ever mentioned! dlnelson7 is right; i almost, and say almost, delight in seeing people cringe at the pump. but then again, many who drive those SUVs is because THEY can afford it $4 a gallon or no. The ones that suffer are those poor folks driving hondas and wondering why that five years ago they could fillerup for $9 and now its $35. PEOPLE WE NEED TO START DEMANDING OUR RIGHT TO GROW INDUSTRIAL HEMP!!!
AXELNOSAL-sorry to hear about your friend, is the scrutiny coming from the locals, the state, or fed? lmk thanks.
Please excuse what may sound like stupidity on my part, but for the life of me, I can't understand why the large gasoline and gas producers ignore the writing on the wall and don't begin immediately to begin to put some of their vast wealth and expertise into newer forms of clean energy production. Global warming or not.
It's in their own best interests because they know that the record profits they are seeing won't last long and they will end up the big losers when countries that are actually investing and using newer, smarter, renwable and cleaner forms of energy now, will be ready when the days of petroleum are over.
Maybe they are secretly doing a lot of R&D right now and are just milking the cow for all it's worth now to make the billions they are raking in at the human race's (wars, pollution, destruction of the environment, et cetera) and the planet's expence.
And once that happens,presto! They have an alternative ready to go for everything and will blow away all the smaller, smart folks who are trying to make the inevitable changes now.
At any rate,such shortsighted greed disgusts me. We could have done all or most of the obvious changes years ago but instead, those with the capability and money are willing to let the rest of the world suffer so they can enjoy money that is so huge an amount, no person could even possibly spend it.
Please, tear me apart with your posts. Maybe I need a few slaps on the head to wake up to something I'm not seeing.
If we can't get it together with what the Earth can provide us, help is obviously on the way.
http://www.portlandonline.com/osd/index.cfm?c=ecije
The link above is Portland's report on how to handle the economic meltdown caused by Peak Oil / Natural Gas.
Basically, in a nutshell:
Support your local farmers, buy direct from CSAs, and learn skills for a low energy future.
Growing food at home is an option, but most people are too lazy to go there right now, or they have a tiny yard made from roll-a-lawns laid down by home builders.
Good soil is created with compost, so start saving those food scraps and get some worms, pronto!
Two people in my workplace are currently shopping for cars, one will trade in her 5-liter Mustang for a GMC "crossover" type SUV pr similar or poorer fuel economy, or a full-size pickup truck. The other is looking for a some other kind of big SUV, and commutes about 55 miles each way, every day.
If they are representative, than most middle-class USAns are still clueless!
There is one solution to high fuel prices - mandatatory, stringent fuel economy standards. But for the US suburban middle class, mandatory use a european-sized subcompact car for routine transportation would be raise an outrage so loud one would think the government was proposing a Stalinist purge. This is not hyperbole.
So, since this is "not politically feasable" as all our politicians say, I think that very high gasoline prices are a splendid thing!
Meanwhile, just in time, I will be starting another season of doing my 6-mile commute on my penny-a-mile (395 mpg equivalent) Chinese electric motor scooter. The bus or trolley is another option.
One item missing from Klare's essay is the rate of decline, which is that amount of oil extraction that must be replaced by new extraction just to maintain an even level of extraction. This rate for non-OPEC was just put at 7.7% by the IEA, and Schlumberger, OPEC's primary oil field servicing company, says OPEC's is 8%. This means if you are extracting 10Mbbls/Y at a decline rate of 8%, you'll need to add 800Kbbls/Y just to stay even. If you cannot, then your rate of extraction falls from 10M to 9.2M to 8.464M to 7.787M, and so forth until it's gone. Unfortunately, rates of decline tend to accelerate.
If the planetary decline rate is 8% and total extraction of crude oil plus condensate (the most true measure) is about 27Billion bbls/Y, then 2.16Billion bbls/Y must be discovered just to keep even. This has NOT been happening as C+C has declined since its peak in 2005. Much of the above information can be had at theoildurm.com and at energybulletin.net and at other likeminded sites. And for hybridoma2001, there's a lot of intense discussion and articles about what is being done to advance renewables at the sites I provided.
One additional item. The SJMercury News reports that diesel has broken through the $4/G mark, http://origin.mercurynews.com/valley/ci_8519917 And although much of Europe's over $8.40/gal is tax, they have adapted and prospered.
"The Bad News at the Pump"
A lot of folks here think we should get away from oil based products, for a number of reasons. Is it really bad news then for people who feel that way?
Unfortunately, the two clueless minions USAn alludes to ARE REPRESENTATIVE of the US middle class. The neocon propaganda machine will convince them to vote for McCain by saying that oil would be cheaper if the Democrats had allowed drilling on federal land in the western states, including ANWR, and oil would be cheaper if the Democrats hadn't stopped Bush from invading Iran.
hibridoma --- I think it's because we are dealing with people who only live for today. To amass as much as possible and pump their egos up and satisfy their greed for one big gigantic pseudo-high today. They aren't reasonable and don't look to the future. They are like adolescents satisfying their desires with no thought for the future or anyone else.
"Please excuse what may sound like stupidity on my part, but for the life of me, I can't understand why the large gasoline and gas producers ignore the writing on the wall and don't begin immediately to begin to put some of their vast wealth and expertise into newer forms of clean energy production. "
Continued strong demand.
hibridoma - I've been working in the energy sector for years, and they seem to have trouble seeing past the next fiscal quarter, let alone years into the future. They just want to drive up stock prices in time for their options to vest, or bonuses to be paid out, longer term planning doesn't really matter much to them.
I think it's related to the "professional manager" class that thrives in publicly traded companies. They didn't work to build the company up. They don't have a whole lot invested in the company. They don't stand to benefit from something that will make the company money 20 years down the road.
Add the fact that they are almost all old white guys who don't want to take any risks before retiring (soon), and you have a recipe for maintaining the status quo.
While it's true that there is a lot of demand for oil, let's not forget that the big oil companies are setting new profit records almost every quarter while the public is being gouged at the pumps. While big oil gets profits that are growing as we speak, Preznit Bu$h is threatening to veto a bill that would eliminate the $15 BILLION tax break they are getting at the same time. Meanwhile, much of the oil that used to come from Iraq is staying in the ground as a result of the war.
Anyone ever wonder what was discussed in that secret closed door energy meeting between Dick Cheney and big oil that was held way back in the early days of the Bu$h reign of terror?
The key word is EQUILIBRIUM. The US uses 20 million barrels per day, one fourth of the world total while being less than 5% of the people of the earth. This is where the needed oil will come from. Through excess consumption the US will become poor, buy less oil and a new equilibrium will be established. Finally, Americans will consume only their share and not everybody elses. Unfortunately this will happen only when the US is poor, which should not take too long..
If you want to be a pain in the ass, drive the speed limit, or even 7 miles an hour over the speed limit. Watch how many one person in the SUV or overpowered pickup, tailgate you on their way to the gas station to fill er up. I do believe most Americans are actully brain dead.
Thank you Shawn, you get it. Peak oil is a reality, but we haven't reached it yet, not even close. Peak oil predictions have historically been more pessimistic than reality, and still are. The high price of oil is contrived, it's gouging. The Iraq War is one component of that - as long as that oil stays in the ground, Big Oil execs are laughing all the way to the bank. OPEC is another component. Oil companies are another: they purchase exploration rights, and then fake it that they haven't found any oil to keep supply down. And oil companies stuff their reps into government - the current government is nothing more than a oil consortium - that secret meeting Shawn refers to says it all. They pulled everything they had to stop the minutes of that meeting being revealed. The Iraq war was a struggle between the neocons (Rumsfeld, Wolfowiz) who wanted to flood the world with cheap oil and Big Oil (Bush, Cheney) who wanted to cut off supply to line the pockets of their masters. Guess who won?
Peak oil is HERE people. Reports I've seen say that World oil production has been nearly flat at around 84 million barrels/day since July of 2006. That is pretty much the definition of peak oil. There might be swings within that plateau, but for all intent and purpose, we have reached the point at which we have taken half (the easy half) of the World's oil reserves out of the ground.
Our leaders only pander, they do not lead, because they know that telling the truth will cause them to lose elections. Until people realize the pain is real, and not only caused by greedy oil companies, nothing will change. Given human nature, however, I don't think that most people will admit the problem, even in the face of unambiguous facts. The truth is just too awful for most to fathom. For a Country that overwhelmingly believes that a prophet who's been dead for over 2,000 years will rise from the grave and lead them to paradise to accept the fact that the age of "Happy Motoring" and over-consumption is over is asking too much. The coming collapse of society and mass human die-off is what we will reap for our denial.
Hybridoma:
Businesses do not do independent, basic R&D. That is done by universities at public expense. R&D in the business setting adapts already existing facilities to the discoveries made at public expense. Businesses wring the last dollar out of their old investments and then whine to the government for incentives to build new facilities.
City of Portland:
People who do not own land cannot do subsistence farming. Owning land distributes populations over greater areas, requiring more transportation. These recommendations would lead to a dissolution of the city itself, with perhaps little gained in overall energy consumption.
Hybridoma,
BP, Chevron, Shell and even Exxon are all funding projects in cellulose ethanol and alternative fuels. They are taking their time, because it is theirs to take. By the time all the venture money does most of the development and it actually works, the oil companies will just come in and buy them. No sense taking risks when you can take profits instead.
Let's be succint:
(1) Oil and Gasoline is a government backed monopoly.
(2) Our Motive power is enslaved to the single source commodity - oil
(3) Our Gov't isn't motivated to get out of this mess (even after the 70's oil embargo) because our politicians are addicted to the oil/gas tax revenue like a crack whore.
(4) Ethanol isn't an energy solution but a scam.
and finally
(5) What we NEED is a true free market in energy
How about a 4 day work week? Or, telecommuting once or twice a week?
Make all Federal buildings run by solar energy...imagine al lthe jobs that will create.
There are so many ideas but corporations and the federal government are tied to Wall Street...u know the rest!
truthtelle: "Reports I've seen say that World oil production has been nearly flat at around 84 million barrels/day since July of 2006. That is pretty much the definition of peak oil." It's not the definition. Replace the word "production" with "supply" and maybe it is. It would be true if the oil market was a genuine free market, but it's not. Production is being deliberately hampered to increase price. OPEC has been running on this premise since 1973!
(P.S. I am certainly NOT advocating a free market for oil, it would be a disaster, I'm saying it like it is.)
homeward-angel,
Michael Klare is nothing more than another DIVORCED from reality TAX-UH-CHEW-SHITS PHONEY FAGGOT whose side job is writing more gloom and doom articles like these everytime.
Speaking of solutions, I wrote a letter to him asking him about his thoughts on solar, wind, geothermal, and hemp and here's his response below:
----------------------------------------------------
Dear Sir:
While your ideas of the alternative renewable resources that you have mentioned sound good, please keep in mind that America had to go through a tough period in time to win the war on drugs. Legalizing hemp would interfere with America's ability to win the war on drugs. As for solar and wind, they constitute very small energy usage and in fact require more petroleum with which to operate. I am sorry but you are just going to have to accept the fact that as goes easy oil as goes the future.
Just heard that Admiral Fallon resigned as head of Central Command. War with Iran is much, much closer and so are oil prices that will be as high as Willie Nelson.
"(1) Oil and Gasoline is a government backed monopoly."
Nonsense. Here is a list of oil companies:
http://en.wikipedia.org/wiki/List_of_petroleum_companies
Yes. some of them are "government backed" as you say but they *compete* against each other in a global market.
"What we NEED is a true free market in energy"
What is your suggestion?
actually, the latest increases _are_ a spike, fueled by the need of speculative dollars to find a new haven, having been forced out of the mortgage markets. and it is this dynamic which is the basic cause of the current period's inflation and collapse of real production. this is no secret, and i find it odd that the author makes no mention of it.
Frederick, what is your problem with FAGGOTS?
A faggot is a bunch of sticks bound together which can be burnt in a fireplace, when, for example, one has no more fossile fuel.
So, why do you use it as what appears as a pejorative?
In any case, I think Mr. Klare's response fare quite favaorably compared to you introduction to his response.
Let's face it. The problem is a lot bigger than just oil. The value of the dollar has plummeted. The Empire is approaching its final death throes - unsafe drinking water, 40,000+ patients in the Nevada clinic exposed to deadly diseases, 18,000 deaths every year due to lack of health care - on and on it goes.
A lot of good comments here but I disagree with those who blame the victims. Many have been conserving for decades. Not everyone has public transportation in their area. Not everyone CAN grow their own food. Some people live in apartments. Some are old or disabled. So far, this panic at the pump is dividing us, because not ALL of us are affected. Those with money will continue to live life as usual. Sounds like some here have never personally experienced chronic hunger from food shortages, lack of transportation to essential services, and other hardships.
How would you like to be an 82 year old living in the northeast, with insufficient money for heating oil. That was my friend. He died.
All of this and I'd bet a full tank of heating oil that at least 90% vote for a repub/dem in the next election. The ultimate responsibility falls on the voters. They will continue to get what they vote for - and more will die.
This has reached crisis proportions when considered in the context of our children.
High prices may be a pain now, but on the bright side, prices are high enough now that wind and solar can compete in their own right.
The cool thing about these sources is the jobs and revenue stay here.
Now if alternative energy subsidies would become even a fraction of the tax relief subsidies and lease subsidies we give to the oil companies...
Higher prices at the pump will eventually mean higher prices for everything being transported, not just for personal transportation. The effect will be to force people to travel only when necessary, and use more of their earnings to buy necessities.
This will serve to accelerate the economic downturn. I do not think the news is all bad though, since it will force all of us to restructure our priorities. Part of that means buying less outsourced goods.
Another good thing that come out if it (from the perspective of the rest of the world) is that the US will run out of money for its wars.
How much are we spending on the military conquest of oil?
How much are we spending on sustainable energy research?
Shameful.
Last year I went shopping for a new car. Hard as it was to face, my beloved old '87 VW Golf was at the point of becoming too much of a financial burden to own. Car repairs were eating me alive. Part of the reason I hung on for so long was its ability to get a miserly 45 mpg, even in its old, dilapidated state. Back when it was built, they were making very fuel efficient cars. But the cheap oil of the 1990's meant a return to big gas hog cars and unfortunately, Detroit has failed to keep pace with the rest of the world in its ability to create fuel efficient cars that people actually want to buy and that are well made.
The car I ended up settling on was a brand new bright green 2007 Hyundai Accent hatchback that came within my budget and then some. Part of what sold me on it was its superb warranty package, but also the Superior Green Rating from the American Council for an Energy Efficient Economy for its ultra-low emission engine. Oh, sure, I would love to have bought a Toyota Prius or Yaris, but they were outside of my price range, so I settled on the Hyundai instead. Now, it doesn't get the mileage that my old VW got, but it doesn't do too badly, all things considered. Still, it does have a smaller fuel tank than the VW, meaning I do tank up more often. That does kind of get me when I see gas prices going up - and up - and up........with no real end in sight. But I have no regrets on buying it whatsoever.
As I drive the 15 miles to work each day, I am always astounded at how many people still drive big gas hog SUV's, pick ups and vans. I see very few subcompact cars. Americans have a long standing love affair with anything BIG. Big cars, big houses, big Texas ten gallon hats, bit bellies, big restaurant portions, big screen TV's, big bucks, big rocks (diamonds) - you get the picture. Americans simply can't fathom the idea of living smaller, simpler lives. Oh, some folks have embraced downsizing their lives and simpler living, and good on them, but maybe what these oil price shocks will do is to drive home the unreality of living big in this country. We are, after all, consumers of 25% of the world's resources, and yet we're not even the biggest country (Americans would probably be shocked to learn that with their penchant for big stuff!).
Well, maybe the upside of all of this will be a greater push to end our destructive dependence on foreign oil and a real push toward an Apollo like project to create green and renewable sources of energy. I figure it this way - back when JFK challenged us to go to the moon and back in less than a decade, I am quite sure that there were people that thought that he was mad, insane or crazy to even propose such a thing, but the fact of the matter is that we engaged the best and the brightest to get us there. Jobs were created, spinoffs that we still use today were invented (like this computer that I am typing on right now!) and prosperity happened as a result. The same could be said of green technology and the push to end our dependence on fossil fuels that contribute to global warming.
It's obvious that our entanglements with the Saudis are not to our best interest. (Oh, and by the way, have any of you read Craig Unger's excellent book, "House of Bush, House of Saud"? If not.....PLEASE do yourselves a favor and read it NOW! You'll thank me later, trust me!) Part of what is causing these price spikes is the fact that the Saudis trade oil in American dollars, which are falling faster than a heavy rain off of Lake Erie during a summer thunderstorm. This causes a cascading effect which in turn drives up the price of gas. I think it's time for the US to divorce itself from a country that is holding us hostage via oil and, oh, by the way, just happened to contribute 15 of the 19 9/11 hijackers, and I do not think that there was any coincidence there, either. I've sensed that there is some deadly game going on between us and the Saudis that I don't think any of us can even imagine what is going on. But it strikes me as a dangerous cat and mouse game where we Americans are being held hostage between two powerful and secretive players in petro-dollars.
I doubt we'll ever know the real truth, frankly.
NEVER FORGET that the Iranian revolution was a direct result of the USA overthrowing the fairly elected President of Iran and installing the brutal dictator the SHAH...simply because the Irainians wanted to nationalize their oil to prevent themselves by being plundered BY THE USA
The USA seems to create its own enemies as it needs them.
This crisis has been brewing since Jimmy Carter was thrown out of the WH. Americans didn't want to hear about conservation. They were all about listening to "The Cars". Let the good times roll!..... Ronald Raygun spoke to their souls and told them that "Greed is Good!" The national obesity crisis then took off in earnest as exercise went the way of the Sinclair dinosaur.
Dubyuh has worsened the crisis immeasurably by sending the dollar into a tail spin and creating massive debt. Things will get a lot worse before real solutions are taken seriously. Some real belt tightening is in order as that paycheck from Home DePot may not be enough to fill the tank of one's monster SUV.
"Higher prices at the pump will eventually mean higher prices for everything being transported, not just for personal transportation. The effect will be to force people to travel only when necessary, and use more of their earnings to buy necessities."
That's part of what will happen. The high price will also encourage greater efficiancies throughout the economy. Today the US produces roughly twice the inflation adjusted GDP per barrel of oil as it did 30 years ago, largely due to efficiencies as well as frugality.
"I do not think the news is all bad though, since it will force all of us to restructure our priorities."
True, we should be doing that anyway but money talks and will force the issue.
Yup, in any part of the world where driving, alone, every day, on pavement, in an SUV, is considered some sort of God-given right that only the enemy would dare criticize, any increase in cost could be a feasible path towards getting people to drive smaller things, and drive them less. It's certainly not enough, but at least it's something. People are much more inclined to avoid bankruptcy than they are to contribute to the common good. Well, a bit more inclined, anyway.
DLNELSON
good for you nelson. here you are after 15 years without a car and still alive to tell the tale. it was easy wasn't it? shame more people don't adopt your philosophy. i am a novice in the 'no car' scenario. i've been without one for only 4 months and life is fine. i have a bus service if i want to use it or i can walk 4 kms to the nearest supermarket/post office/bank/restaurant etc. the supermarket delivers free of charge for large purchases. i get to exercise and see the surrounding countryside on my walk to the amenities. granted, some people would find it difficult if they were in an isolated area, but i'm sure many, many, people could give up their cars if they really wanted. and who knows, maybe these astronomical prices at the pumps will make them think about it.......
Came out in Al Jazeera that Cheney is to take a trip to the Middle East, Israel, Egypt, etc., but most interestingly to Saudi Arabia.
It's being billed as a trip to smooth over tensions in the Middle East and all that, but it makes much more sense from the following points: 1) with oil nearly at the $110/bl mark, 2) the US$ in free fall in part due to the deficit funding of its wars for oil, 3) ethanol energy gained from maize uses as much fossil energy inverted in its production, and as the oil price goes up loses cost effectivity, (costs more that its use price) 4) and the consequent spiral up of food prices around the world is rapidly increasing the opposition to any more agrocombustibles. Renewable energy is based on local resources and is not easily controlled by corporate centralism.
So Haliburton Cheney is off to bully the gulf states into producing more; but the problem is thay can't. The biggest fields in Kuwait and Saudi Arabia are already at or past their peak, as are México and the North Sea. Things are very desperate for the big boys now.
"People are much more inclined to avoid bankruptcy than they are to contribute to the common good."
That's true enough. I think it's because they don't know the individuals that make up the "common good", but they do know their own freinds and family.
30 years ago my late father told us that there aught to be a 1 dollar a gallon tax on gasoline. We didn't quite get it then. I suppose the reasons had to do with the ecological and economic aspects where less fuel consumption would be desired. Now here in Belgium, we pay about 1.38euros a litre which is around 8.4 bucks a gallon. Of course most of this price is tax. My small car requires nearly 70 euros to fill up its 50 litre tank. That's about 107 dollars. It's no surprise that the cars here are a heck of a lot smaller and more efficient. It's no surprise that there are so many small diesel engines nor that there are so many lpg or liquid petroleum gas modified cars like mine that run on a fuel that costs less than half the price of the gasoline. It isn't a surprise either that there are so many tram lines, train lines, bus lines and subways and light rails. It's no surprise either that there are corner stores and that you can get all your needs for your household in any city by walking a few minutes with a caddy for your groceries.
But this is still a situation that is insufficiently efficient. There needs to be hardly any private cars and also of extreme importance is how to turn all of the beautiful old housing stock into zero energy consuming shelter. I think it is possible but I don't think that people are ready to hear how. In ten years they'll be ready though.
In America, I would expect the division of macmansions into multiple apartment units in the very near future. Anyone initiating the movement now would get in early on an inevitable and promising market. The market for gardening will also begin to skyrocket out of necessity as the recession coupled with inflation really begins to bite for a lot of people. Actually, any idea that can save resources or can save people money will begin to become attractive out of necessity. Good luck and go for it.
The price of oil is rising because the US consumes to much of it, making it expensive for all who now need more. Poverty in the US is essential for the health of the planet. Fortunately, it's on its way.