Permanent Human Settlement of the Earth, Space and Ocean Frontiers

Monday, March 17, 2008

A Crude Awakening

Two days ago I picked up my brand new Toyota Prius. My gas expense was thus instantly cut in half. In fact, after an extensive set of calculations, even though my car payments increased, because of the difference in gas prices, I was making money the moment I drove my new hybrid car off the lot. While I was in the car dealership, they sold three of the hybrid cars while I sat there and they only received a shipment of six of them the day before. That’s the good news. Unfortunately, that is the only good news in this story. In one view, now I am paying out almost exactly what I paid out two years ago for fuel and my car payment is higher. Further, there is a well placed rumor that gasoline will be selling for $5.00 per gallon in the United States by late summer as oil process soar.

There are a lot of ridiculous rumors going around that oil prices are set by money grubbing oil companies. The truth is world oil production has peaked just as geologists said it would decades ago. Further, no new refineries have been built in the United States for decades and our refined energy product production (gasoline and diesel) are linear with a non-linear demand. Therefore we have to import more of these energy products so that today more than 70% is imported from outside the US. Unfortunately, just as oil production peaked, US demand rose but international demand spiked – particularly form China. It is an economic reality that demand determines price and that is why the energy prices are what they are and there is no end in sight. Drawing the equation out to its end-point, energy is the single most pervasive influence in any modern economy. Energy costs are spread out evenly thought the culture. It will soon be reflected in electrical power, food and all other costs.

So what can we do as individuals to simply survive this building crisis? Take a pencil, paper and calculator out and run the numbers on your fuel prices versus what you are driving. You may actually make money like I did by buying a hybrid car. You can install a water heater timer and save up to$20 monthly beginning on day one! You can re-adjust your thermostat. You can take public transportation or car pool. You can shop by internet. You can install solar panels to absorb some of your energy costs. You can install a solar water heater. And this is just the short list.

What do we have to look forward to? An economic and energy crisis is now unfolding. But it is not too late to stay ahead of the curve. Stop and examine your lifestyle, make positive changes and proactively respond and not just react!