With the latest crude oil price hitting $115 a barrel on Wall Street and more increases predicted to be on the way. I decided to do a little intensive investigating to see if I could find a common denominator between the rise in oil and the sharp incline in gold prices.
It wasn’t long before I realized my search needed to be refined to just oil and it looks as though I may have to write about oil and gold together at another time, as there is so much that needs to be reported on with oil alone.
I figured that the big increases probably had something to do with Big Oil, the wars in the Middle East and/or George Bush and his friends pockets. Unfortunately, from a writers point of view, there is no obvious corporate conspiracy to blame it on.
The answer simply was in supply and demand, as production can’t keep up with the worlds expanding addiction for not just gasoline, but for all of the many products and services that we take for granted, such as manufacturing, the computer industry and food production and transportation which are so dependent upon oil.
Our whole country and most of the industrialized countries of the world can’t survive without oil as we have steadfastly defined our culture around its production.
The world as we know it is abruptly coming to an end and most people aren’t even aware of it.
It is not that we are running out of oil so much as it is that we can’t produce it fast enough to support the economy.
In the 1960’s gas seemed to be an endless commodity and service stations around the country were having what was referred to as “gas wars.” Stations were selling gas for as little as 18 cents per gallon trying to steal customers from their competitors.
That all came to a screeching halt in the early 1970’s as America experienced it’s first oil shortage known as the Arab Oil Embargo. That shortage proved that a drop in oil production as small as 5% can have a devastating effect and caused the price of gasoline to increase four fold.
During that period, the public went into a frenzy, “topping-off” their gas tanks, thinking that that you had to “get it while you can” in order to maintain their oil dependent lifestyles. Mile long lines at gas stations were common as well as people resorting to physical violence, trying to get to the pump before the stations put up the dreaded ” Out of Gas ” sign and closed sending customers that had been in line for hours away to find another line. Many vehicles actually ran out of gas before ever getting to the pumps.
In an emergency meeting, Congress was forced to pass laws in order to try to bring the chaos under control. Most people today might think that some of these laws were ridiculous, one being it was a felony to top-off your tank.
Other measures went into effect such as mandatory rationing, gas by appointment only and even using odd or even last numbers of your license plate to decide what day of the week you were allowed to by gas. Most new to late model cars of the time were gas guzzlers and cars were being sold at less than wholesale prices and/or traded for gasoline.
Unfortunately the days of long gas lines may be on the horizon again in the near future, and we will see supplies dropping at an alarming rate of 3% per year. The 1970’s shortage was only temporary. Unlike the new shortage as it will not end and will effect the price of all consumer goods including food as we are seeing already.
Above ground conditions including weather, war, major catastrophes etc. could push that envelope to more than 10% per year within 7 years. If that is the case, we can then expect gas to be closing in on $10 per gallon instead of $5 as it is now.
(Note) While gas prices in California are always higher than average due to the MTB additive, the price at the authors local Chevron station is over $5 per gallon for premium gasoline. It costs over $100 to fill a 20 gallon tank. People in some parts of the country are still paying under $3 per gallon.
World oil production peaked in 2006 at 80 million barrels per day and now in 2008 has began to drop down the back side of a chart called the “Bell Chart.” The chart is called that because the graph line on the chart used by many annalists to show the production of oil from about 1900 to 2060 and beyond, measured in millions of barrels per day, is shaped like a bell. This same bell on a chart of 1000 years would look like just a bleep. Production levels for 2030 are expected drop to equal that of 1930 levels.
Again it is not that we are running out of oil as of yet. We are however running out of cheap oil. The question now is. . . Is it worth it to drill for oil 6000′ below the ocean and 350 miles off shore or even consider using our depleting reserves to refine oil shale and tar sands in order to sqeeze out a few more barrels?
There has been much controversy over drilling oil in the ANWR (Arctic National Wildlife Refuge), but with todays consumption, there is no more than 3 months supply of oil there.
The same is true here on the North Coast of California, which has been boycotting oil for decades due to the fact that the ocean producing over 20′ waves and bordered by cliffs would make a spill a catastrophic disaster. If. . . it was decided that these waters absolutely needed to be drilled, as they are trying to say about ANWR, the supply would only amount to 3 or 4 months worth of oil production.
It may come to a surprise to some, but the largest supplies of easy to get to oil (cheap oil) left in the world are Saudi Arabia and you guessed it Iraq, followed by Iran, Afghanistan and many other Middle East countries. Draw your own conclusions.
So where does this lead us today?
When it comes to all the other possibilities for energy, we need to stop calling them alternatives and start calling them substitutes, as they will someday be our only affordable choices.
Many of the substitutes that have been considered so far use large amounts of oil in their productions and those are things that need to be considered as well. Metal for example takes an enormous amount of energy to produce, from mining of raw materials to trucking that material to a smelter, to shipping the finished product, vast amounts of energy must be used. As mentioned above, many if not most of the products we humans use to live the lives that we do, are dependent on oil in one way or another. As supplies of oil become harder and more expensive to recover, supplies of all products will become harder to produce and much more expensive.
This may seem a hard to swallow but with things going the way they are now, with human existence being so dependent on this vanishing resource, we are quickly headed back in time to where we were 150 years ago. Think about it.
We absolutely have to come up with a substitute way to run all our vehicles, including our nations trucks. All free and/or renewable energy can not just be considered, but must be implemented soon. Hybrid and solar electric vehicles are not just alternative transportation choices anymore, they are the only choices. If over 90 % of our automobile driving miles a year are with-in 50 miles of our homes, what is wrong with a car that only gets 50 miles per charge? We can not put this off until after the cheap-to-recover oil wells dry up and the oil wars escalate into another World War.
Like it or not, they have already started.
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