Bad News at the Pump: The Dangerous Implications of $100-Plus Oil

[marmar]

from TomDispatch, via AlterNet:




Bad News at the Pump: The Dangerous Implications of $100-Plus Oil

By Michael T. Klare, Tomdispatch.com. Posted March 15, 2008.

On March 3, the price of crude reached its highest ever. Are energy costs becoming the decisive factor in the balance of global economic power?



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. ......(more)

The complete piece is at: http://www.alternet.org/audits/79505/

[FreakinDJ]

1. Hence the rush to Nuclear power

[Mad Vulcan]

2. Outsourcing

I wonder if our outsourcing to India and our buying massive amounts of good from China has made it possible for these countries to actually afford cars.

[JPZenger]

3. High price does have environmental benefits

Yes, I understand that many people and businesses are suffering with high oil prices. However, there is an environmental benefit.

One, it encourages people to live closer to their work, and promotes revitalization of older neighborhoods vs. building on open farm fields and mountainsides.

Two, it encourages people to buy more fuel efficient vehicles. Generally, the more fuel efficient a vehicle is, the less CO2 it will generate, which causes global climate change. Considering that tens of millions of people in low-lying Bangladesh may otherwise be underwater with no place to go, this is important.

Three, if makes it more cost-efficient to invest in solar power, wind power, fuel cells and other alternatives. It also makes it more cost-efficient for businesses and individuals to invest in insulation, more fuel efficient appliances and other energy conservation measures.

Four, it may spur China to avoid mistakes made by western countries of an overdependence on private cars, in favor of mass transit.

Considering that world production of oil has reached a long-term peak, and there are only a couple countries with any ability to increase production, and demand has been rapidly increasing worldwide, reduced demand would be a good thing. We need to reduce oil consumption before it becomes a crisis.

[marmar]

4. Agreed....It's just going to be very painful because of the lack of foresight....

...from business and political leaders who built a country based on an unlimited supply of oil. Not one with localized economies and public transit.

[FreakinDJ]

5. Don't agree - all we've done is outsource pollution

Higher prices represent China and India's demand for oil.

Just in case you haven't seen the latest from Beijing, they have the worst air pollution on the planet. Thinking pollution is down because oil consumption in the US is down is very short sighted and uninformed oppinion. Closer to the truth, because these countries have "Next to None or NO Environmental Air Quality standards" associated to vehicle emissions the net result is INCREASED pollution.

Outsourcing INCREASES POLLUTION plain and simple