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Cost of Crude

By       Message amos richardson     Permalink
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Years ago, there was an oil company that took as its logo symbol a dinosaur named Dino. That symbol seems now prophetically appropriate. Much like that company, since taken over by a larger oil company, the entire industry has myopically chosen to ignore the facts of the future, and are doomed to the fate of that famous dinosaur.

The ability of the world to produce crude oil has been calculated to be no greater than 86 million barrels a day (mbd). That number was probably hit sometime in 2010. By 2020 world production is estimated to be no greater than 60 mbd, a more than 25% reduction from today's levels. The United States, historically, has been the consumer of fully 20% of total world production. Domestic production accounts for only a fraction of that amount. The majority of our consumption is provided by the Saudis, our allies. The fact remains that oil, out of the ground, loses its politics. The market is a true world market. A 5% reduction in supply during the 1970's resulted in a quadrupling of the market price. We are an energy driven economy and society. Within the next 10 years, world population will be twice what it was in 1980. World demand for oil will be four to six times what it was in 1980.

The International Energy Agency (IEA) estimates the world vehicle fleet will double by 2035 to 1.6-billion units. Chinese vehicle use shows a 10-fold increase to 350-million units in that time. Chinese auto sales have already surpassed U.S. sales. The use of gasoline vehicles is substantially limited to people in the Middle Class. China, with virtually no Middle Class, and a growth rate of GDP at 10%, has a much faster growth rate for their Middle Class. Vehicle sales in India are also brisk. There exists no real methodology for calculating growth of the Middle Class in China; each society has different base-line parameters, and automobile sales must remain our foundational number when calculating crude oil consumption in China.

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The IEA has estimated that Chinese coal/electric production will account for fully 30% of world carbon pollution within 30 years.

There are now 11.5-million natural gas powered vehicles on the road worldwide, and that number is expected to climb to 65 million by 2035. The U.S. has sufficient supplies of natural gas for at least a few years. Our over-the-road trucking industry would switch over quickly if supplies were available on the road.

Most of our energy needs can be met with non-crude (renewable) sources. Oil and gas are now necessary for many non-energy uses, such as plastics and chemicals.

It is estimated that, in 2009, the U.S. spent 350-billion dollars on imported crude oil. That money, gone as an expense, could have provided thousands of jobs domestically, and contributes to the world glut of U.S. dollars. To support the oil supply stream we are engaged in two very unpopular wars, at an incalculable cost in lives, dollars, and world esteem. One conservative estimate of the cost to society for each gallon of gasoline we burn is $15.

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The cost of food to consumers is inexorably tied to the cost of crude. One calorie of food energy requires 10 calories of hydro-carbon energy, plus the cost of transportation. It is reported that an average transport distance for consumables in the U.S. is 1,500 miles.

The accumulated knowledge that humankind has acquired thus far has led us to confident projections for the future that are chilling in their conclusions. The weight of humanity that the world carries has passed capacity in several areas. The prosperity of advanced nations over the last 100 years cannot be maintained with dependence on fossil fuels.

As our nation faces decisions about energy use and environmental impacts we must strive to maintain a cool, empirical view. As the coming years pass, our opportunity to adjust will diminish. Whatever we decide, or do not decide, the consequences of diminished oil supplies will come to us. The societal changes we will face can either occur with the reactive market or, more humanely, with foresight and planning.

With the arrival of highly inflated energy prices we will see a re-urbanization of America. The ratio of income spent on food will explode. The variety and quality of food we now enjoy will no longer be available. Homes will be much smaller, heating with oil will be prohibitive. The migration to the South will accelerate. The dollar will become a near worthless currency. Most people will live in walking neighborhoods, much like the "live, work, shop" communities now being built in progressive European countries. Travel will become prohibitively expensive. It will be a painful, dark world.

The faster we address the problem, the more prepared we will be, and the potential for pain can be reduced. The coming Republican Congress has signaled that any preparations are anathema to their constituents -- the oil and gas industry.

Republican officeholders seem to only use the thinking that is reflected in the dogma of the Heritage Society and the U.S. Chamber of Commerce. For those interested in making any progress in the areas of energy consumption, alternative energy, or environmental degradation, any mention of Cap and Trade will have no traction; in fact, it will raise an impenetrable wall with the people who subscribe to the conservative denial. Mention of "taxes" in any form will have the same result. Both Heritage and the Chamber proudly espouse "free markets" and "private innovation."

Although their constituents are clearly business, even Republicans have a vague concept of the need to reduce voter rage. Alternative energy manufactures, installers, and users could influence the Chamber and Heritage to allow some systemic changes, reversible electric meters, tax credits for solar installations, electric cars, and benefits to business for things like the profit potential of mass transit systems. Our right-wing politicians have always been receptive to cash, of course, but it is likely that alternative energy interests will never be able to compete with the checkbooks of Dallas oil interests.

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Our government structure was built on the model of the Iroquois Nation. They also based public decisions on the effect to the 7th generation. Studied at Writers Workshop, University of Iowa. Democrat, liberal, progressive, happy, introverted, (more...)
 

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