High gasoline prices are here to stay, forget more drilling, the consumer needs to accept responsibility and adapt.

Taking up where I left off in my last post, there is even more to consider in President Bush’s call to overturn the moratorium on drilling in ecologically sensitive areas. He is keen to shift the blame for gasoline crisis to the Democrat’s thwarting of increased drilling and yet, conveniently avoiding his administration’s role in the problem.

The short sighted rush to open up oil and gas leases in the hope of increasing production has not brought much online in the way of extra capacity. Spare capacity in other oil producing nations has been maximised and Saudi Arabia is the only place where capacity of any consequence could be taken up.

It is really only the high price of oil that has stimulated the bringing online of economically inefficient reserves. This is true even of the places being touted now as possibilities for exploration such as some parts of the Arctic. In past years these were not opened up because the economic costs outweighed profits. Prices have to remain high to encourage exploration in these marginal areas.

If the price was to drop, then once again they would become uneconomic and supply would dry up and demand force the price higher. Therefore the consumer will always be in a bind and high prices for oil and gas are unfortunately here to stay.

There are no easy answers. This is not just a temporary adjustment but rather a fundamental realignment of energy of global proportions. Transport will have to change as will industries that are oil dependent. Renewable, more sustainable sources of energy will need to be found and this will require funding and research. For all those that have failed to see this, the message is, that cheap oil is now a thing of the past. We are in a new era and short term fixes will not halt the pain at the bowser.

It is convenient to turn to politicians in the hope that they have the answers. Tinkering with taxes is just a short term measure, and all the politicians seem to be doing is politicising an issue they know is beyond their power to change by continuing the status quo or looking for scapegoats to shoulder the responsibility.

In fact, the ultimate responsibility is in the hands of consumers, who at the present moment are still in denial, demanding more gasoline at lower prices from their politicians. They, as yet are unable to accept that the world has changed and that there has been a fundamental and permanent change. Not only that, as yet they are unable to appreciate the scale of the problem.

Not only will the consumer be forced to adapt but so will industry and transport solutions need to be found, and much sooner than we think. There will be major reform required and easy solutions are not at hand. Changing to biofuels has opened up a pandora’s box of new problems and potential areas of social conflict.

Oil is expensive to produce and this will keep the cost high. The logistics and technical problems of bringing it onto the market is enormous.

It is time for politicians to stop using the issue for political gain. Real long term energy policy development is needed and difficult and unpopular decisions need to be made. Governments need to take the hard decisions that are required to help people adapt to the permanency of the situation. To expect a return to past levels of consumption is to delude ourselves to the gravity of the situation.

Populist policies may make good press to shore up voters in anticipation of the presidential elections but this will not provide long term solutions to the consumer’s pain at the bowser. Talk of more drilling then, can be seem for what it really is, just a desperate attempt to be seen to be doing something whilst maintaining a ‘head in the sand’ approach to what is really needed!

PHOTO:

Sunrise near the northern tip of the Antarctic Peninsula.

Antarctic peninsula in twilight.

Photograph by: Patrick Rowe, National Science Foundation. Date Taken: April 2007.

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~ by abstraktbiblos on Thursday, 19 June, 2008.

One Response to “High gasoline prices are here to stay, forget more drilling, the consumer needs to accept responsibility and adapt.”

  1. Gasoline as a primary transportation fuel, has already become obsolete. The solution is already on the ground and running and that would be electric cars. Electric cars utilize all fuel sources for electricity: wind, solar, hydro, coal, and atomic. It uses the existing power grid. In ten years gasoline will be as old fashioned as steam as a fuel. Also, India has developed an engine that runs on compressed air which would also use existing electric grids to power the compressors. The electric powered car is here, on the ground and running. The market is screaming for it and it is in
    the process of replacing the gasoline engine.

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