5 Dollar Gas is Good for the World

Last year, as I was bitching and moaning about the price of oil and gas, I came across an optimistic and well written article on Wired.com, telling us about how $5.00 gas was good for America. With a title like Why $5 Gas is Good for America, I'll admit I was very skeptical.

You see, I've always had a hard time with the fluff and politics surrounding high oil prices. It used to be that oil prices rose based on supply and demand. A high demand with a short supply caused issues. Makes sense, right?

But something strange happened during the Bush administration. As we all know, George W. Bush and his family have long had a vested interest in oil. Meanwhile, Dick Cheney, being a former Secretary of Defense and former CEO of Haliburton, has always had an interest in war. So it's really no surprise that before Bush leaves office gas price could very well be double what they were when he entered. Meanwhile, our country has been at war with someone since shortly after September 11th 2001, with Haliburton getting no-bid contracts. That means that we will have been at war for a little over 7 of the 8 years that Bush has been in office.

Despite the conspiratorial tone above, I would be more than happy to assume that oil prices are so hight because of supply and demand, and not some attempt to inflate prices in order to fatten the wallets of oil moguls. Unfortunately, supply is not the issue.

Every time oil prices shoot up someone runs to OPEC and screams for them to produce more oil. OPEC's response is always that we have enough oil being shipped, and then of course, Americans start making racial comments about greedy Arabs. But not long ago, OPEC did release more oil into the market... and nobody wanted it. What?! I thought we had an oil shortage?!

There was no oil shortage. It was a fake oil shortage. They couldn't use the supply and demand on oil as an excuse anymore, so instead, their focus turned to the refineries. Hurricane Katrina had just finished up doing its damage and a few US refineries were offline, so it was a perfect opportunity to blame the high cost of gas and heating oil on a lack of refining.

But then, the refineries came back online and oil price began to rise again, more and more. Now analysts are sitting around blaming the high price on the US ecomony and the weakness of the dollar. It's ridiculous. It's one excuse after another. Meanwhile, the fat-cat oil moguls are making billions.

If we truly are in an oil crisis, then why are these companies having bloated profits? Let's look at things hypothetically, with fake numbers. You see, if oil costs them $0.25 a gallon, they're going to charge us $0.50 a gallon or more. Then if their cost is raised to $0.50 a gallon, they're going to charge us $1.00 a gallon or more. Their cost went up 25 cents, but they made sure that their profit margin stayed at 50%, so now they're making 50 cents per gallon, which is 100% more than they did previously. These oil moguls aren't feeling the crunch at all. They're passing it onto us and then some.

This would be all a conspiracy if it weren't true. Oil moguls and big business are squeezing every dollar then can out of the American economy and they're trying to place the blame on a variety of different reasons. But as soon as the dollar regains its strength, don't expect gas prices to go down a whole lot. I'm sure they'll have another excuse waiting in the wings. Hell, I've even heard recent conspiracies that the high oil prices are a result of a Middle Eastern backlash against the US occupation of Iraq.

So why is $5.00 gas good for the world? Spencer Reiss, in his Wired.com article, makes some excellent observations about the motivating factors of change. Cheap oil was the primary reason for oil becoming the fuel of choice. But will oil prices consistently rising, technological frontiersmen will be on the forefront of a new energy revolution. Here's some of what Reiss had to say:

Big Oil is already reaping the benefits of innovations developed in the 1990s, when long-term forecasts still pegged oil at $20 a barrel. Take digital oil fields - sensor-laden pumping operations under remote control - and ultradeep offshore platforms that drill beneath miles of water and rock to get at previously inaccessible deposits. But with the high end of long-term expectations hitting $40, novel energy sources are becoming attractive. Natural gas that used to be burned as an unwanted oil-field byproduct is being compressed into liquid fuel, and gooey tar sands are being shoveled out of the Canadian countryside to extract the embedded petroleum.

Push the long-term price forecast above $40, and more exotic possibilities come into play. Remember Jimmy Carter's synfuel program, which aimed to turn huge US coal reserves into gasoline? Three billion dollars in federal research money is now committed to making it happen. Corn, sugar, and soybean farmers hope rising prices can do what billions in subsidies and tax-funded research couldn't: make ethanol and biodiesel cost-effective. Smarter money is betting that using plant waste will prove more economical. These technologies join compressed natural gas, already widely used where it's worth spending extra money for cleaner exhaust.

Sustained crude prices above $60 would make feasible technologies that today seem too expensive or entirely speculative. It's hard to see demand for oil surviving long at such a cost. But given a push now, some nascent technologies - hydrogen, most obviously, but also hydrocarbons locked away in methane hydrates - could become viable at the end of a long road. Technology breakthroughs are the key here: For instance, Shell has found a better way to extract oil from shale, reviving a long-abandoned resource. And some seemingly distant options are right under our noses; consider the plug-in version of the hybrid car.

When I read this article, gas prices were at an all time high, Congress wanted to investigate Exxon/Mobile's hugh profit margin, and people were screaming for an alternative. About a month or so later, oil prices began to drop, and a lot of the angst started to die down. People still wanted an alternative, but it wasn't a high priority anymore, since prices were retreating.

Developing alternatives require motivation. OPEC and the big oil companies of the US are walking a fine line between swelling their pockets and outraging their customers. With enough outrage, alternative fuels will gain research financing and fast track development. This will cause greater innovation in energy, and hopefully bring about the energy independence that America needs.

Mister Resistor is a writer, pragmatic political thinker and advocate of subversive media. His web site can be found at MisterResistor.info. You can email him at wakeup ::at:: misterresistor ::dot:: info.

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