An observation worth noting ... and pondering, from the 2012 report "The New American Oil Boom," issued by the Energy Security Leadership Council (a project of Securing America's Energy Future).
In an era of rapidly rising demand, high levels of geopolitical volatility, and tight spare capacity, the price of crude oil is becoming increasingly high and volatile. For the U.S. economy, which is highly dependent on petroleum for mobility, this volatility represents a dangerous vulnerability. Volatility creates uncertainty and economic dislocation and affects planning and budgetary decisions, resulting in less efficient resource allocations and ultimately preventing the U.S. economy from maximizing its potential.
The volatility of petroleum fuels is the single most damaging consequence of U.S. oil dependence.
Higher prices today, or lower?
Market fluctuations are a given for almost all products and services. It's baked into the economic cake. The historical trend is that the cost for most goods will rise over time, subject to the various anomalies also built-into the capitalist market. That's the extent of my economic expertise....
But when prices have increased as much as they have in the past half-dozen years for perhaps the most essential product required to sustain our individual, industrial, and cultural lifestyles, the normal ebb and flow of prices takes on a very different and more challenging hue. The quote above (from a terrific report well worth the read) nicely summarizes the dilemma faced by all of us.
Add in the fact that the supply we're now relying upon, given the ongoing depletion of the finite crude oil supplies we've been relying upon for decades, requires higher prices in order to justify the exploration efforts by the fossil fuel industry. A bit of a dilemma....
An added problem: prices are rising but supply ... not so much. Yes, there's been a noteworthy rise in oil production in the past couple of years. But expecting that to continue, as some ardently insist is all but assured, is a bit of a stretch if truth and facts matter. The realities of sustained production from fracking are telling us a different story about the years ahead.
Despite that hoopla of the recent production increases, we do not yet have in place anything resembling a long-term, more-than-adequate substitute for the conventional crude oil supplies responsible for the countless innovations and technological marvels we all now enjoy. That may not be a problem or concern today or tomorrow for any of us. But finite resources and the increasing costs, efforts, and related considerations in supplying demand will become our reality soon enough. This may not be the ideal subject to test the boundaries of our collective crisis-management skills.
And given how little planning we're doing to adapt to the changes we cannot avoid forever, that suggests nothing but more challenges and concerns in the years to come. As long as we continue to pay lip-service to the need for transitioning away from fossil fuel dependency but instead buy into the short-term, context-free Happy Talk the well-funded fossil fuel industry cheerleaders offer, the fewer opportunities we'll have when finite resources demonstrate what finite resources are.
Paying just a bit of attention to the full array of facts and considerations will go a long way to wiser and more beneficial efforts lasting a lot longer than what Happy Talk is designed for.
Adapted from a blog post of mine