Oil will become even more expensive, a coming up fundamental transition – scary news

There was a lot excitement when oil crossed $100 in February. Some analysts were talking of a bubble in the oil market. Now, oil is close to $130 a barrel and heading towards further spikes. The $100 of February can be considered as a bargain now, as analysts predict that oil prices are likely to increase further. Matthew Simmons, oil-industry insider and expert on the topic of peak oil, predicted $200 per barrel for 2010 as early as 2005, at a time when many smiled at his predicitions. Now, more and more people believe that oil prices could even cross $200 per barrel, after Goldman Sachs said that $200 could be reality in the not-too-distant future in the case of a  major disruption.

With or without a major disruption, crude oil is extremely likely to head for new records due to the simple fact that supply is limitied and demand is increasing. A study by the Energy Watch Group, a coalition of scientists from around the world, reports that oil production has peaked in 2006 and that production will “decline at a rate of several percent per year”. Thus, the global oil supply will be dramatically lower, possibly down by 50%. The study warns that the resulting gap “can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame”.

The study further indicates a worldwide structural change of the economic system which “will influence almost all aspects  of our daily life”. Energy Watch Group hints at the severe problems resulting from both, global warming and resource depletion. Furthermore, it criticizes the International Energy Agency for denying the fundamental changes of our energy supply and for sending a false signal to politicians and consumers that business as usual will still be possible in the future.

The report talks of a “transition period” in which “things might happen which we never experienced before and which we may never experience again”.

Whatever is going to happen in the near future – major disruptions, economic up- and downturns, emerging countries demanding even more oil, emissions trading, …. – energy as we use it today will become expensive and scarce. We’ll have to adapt to these new circumstances and change our way of life. The earlier we accept this development and no longer deny it, the cheaper will be the transition to a  more efficient and advanced economy. The first step is to reduce the dependence on the import of fossil fuels, then the dependence on fossil fuels in general. Then we have to explore and use the alternatives. And finally, we can’t anymore afford to waste energy in the extent we do it today.

The positive aspect of this development is the vast range of opportunities for businesses which focus on alternative ways to power the world. Millions of jobs can be created in industrialized countries which have the know-how and technical skill to make the techniques we will use in the future marketable and affordable. Money will be spend rather at home and create value and jobs than around the world in oil countries. This powerful and promising opportunity should be embraced and be put on top of the agenda of politicians around the world. 

http://www.energywatchgroup.org/Oil-report.32+M5d637b1e38d.0.html

Todd Benjamin, CNN’s Financial Editor dealed with the topic today in his blog:

http://business.blogs.cnn.com/2008/05/21/whos-to-blame-for-high-oil-prices/

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7 Comments

Filed under Economy, Environment, Global Issues, Politics, Uncategorized

7 responses to “Oil will become even more expensive, a coming up fundamental transition – scary news

  1. james

    amen brothers

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