Oil industry minions and their elected spokesmen are furiously working to place a blame for the higher energy prices squarely on the Obama administration. They are accusing the administration of instituting inappropriate conservation and environmental measures. They also are on the attack of something called "Big Green." Can we presume that this invented term is the new target for Right Wing revulsion? Industry representatives would be very happy to accept leases on all known U.S. reserves. However, this would do nothing to relieve present pressure on pricing. They now hold thousands of unused leases that should be developed first. It takes years to develop any new wells, and existing storage and refinery capacity simply cannot handle additional inventory. Releasing this asset now removes its future value to society and our progeny. Their third target is the commodities markets. Our commodity markets are designed to moderate prices. They normally have a flattening influence on values, and the speculators take the hits of aberrational changes in markets, which allows the producers and consumers to operate under nominally calmer conditions.
About 20% of world production is consumed in the United States. Of that, 25% is for personal transportation, the highest percentage in the world, and 20% of our consumption is for heavy truck transport. We import half of our consumption at a cost last year of about $350-billion. That cost in 2011, at present prices and consumption rates, should exceed $405-billion. Those amounts account for about half of our balance of trade deficit. Those dollars represent an expense, not capital investment or even consumer goods. In addition, those amounts do not include the "real" cost of that oil, such as the cost of our oil wars. Curiously, our oil expense money is the cash that feeds our terrorist enemies.
The economies of China and India are growing at 10% per annum. Neither country now has significant Middle Class populations. The Middle Class is the largest consumer of crude oil. Oil is the energy of prosperity. It is what allows the earth to support more than six billion people. As the economies of China and India expand, their Middle Classes experience explosive growth. There is no set empirical method of calculating that growth; however, it is some magnifying factor, perhaps as high as 1.5%. New car sales in China already surpass U.S. auto sales. Considering that the world is at maximum oil production, the increased demand will quickly have a devastating effect on crude oil values as well as the cost of gasoline.
As a nation, and as citizens of the World, our views and policies have been myopic and ignorant. We must prepare for this fast-approaching economic disaster. The world of the future will look much different than the current life structure now in place in the United States. We can do nothing and face an incredible disaster, or we can begin to build a sustainable society, easing the pain of the transition.
What will the world of the future be? The future will see urban populations, locally grown food (with far less protein per person), public transportation, live/work/shop neighborhoods, and smaller, energy efficient spaces.
How can we ease this coming transition? Our heavy trucking industry would quickly switch to Natural Gas vehicles if a reliable supply were available on the interstate highway system. Private industry would implement those capital improvements if government would mandate them. Clean, safe, fast and efficient mass transportation systems (light rail and high speed electric trains) must be built. Much like our interstate highway system, the economics of this cannot be justified by private industry; thus, as a society this must be done by government. Our housing and commercial spaces must be either retro-fitted or designed with "super-efficiency" in mind. Our cities, with existing infrastructure, can either become happy, enriching environments with large and sustainable populations, by proper design and nurturing, or become desolate prison ghettos.
With our present cash-driven political system, entrenched special interests now have a disproportionate influence on policy. Special interests have a vested interest in the status quo; they are change resistant. The change is coming, this we know, we must overcome the power of these special interests before we can even begin an honest conversation of this looming problem.