I was riding my bike to the store last weekend when I saw a long line of cars waiting to fill up at the corner gas station. 87 Octane was going for $2.89, and it looked liked no one wanted to risk missing out on this "bargain" before prices shot back up. Though the reality is, gas prices will likely remain below $3.00 for just a little longer.
The fact is, a weakening economy has created fertile ground for falling gas prices. And this is not likely to ease up in the short-term. However, folks shouldn't get too comfortable. Because while economic downturns and recessionary times don't last forever — depleted fossil fuels do. And that's why these lower gas prices represent nothing more than a blip.Of course, don't expect the old guard to agree with that statement. In fact, over the past few days I've seen well over a dozen articles calling peak oil a myth, and the demand for more fuel-efficient vehicles "over." This really does make you wonder what the view looks like when your head is buried firmly in the sand.
Just Keep Drilling
I won't directly cite the articles that have called peak oil a myth, as most are nothing more than ultra-conservative rags that like to use any excuse they can to support the idea that oil is not peaking, and we should not waste time seeking alternatives. I will not give them any extra coverage that could help legitimize their misinformation campaigns. I will however, turn to one of the many experts on peak oil to get his take on it.
Last week, energy analyst, Chris Nelder reported his findings from the most recent ASPO Peak Oil Conference. Here's an interesting excerpt from his report...
"The major international oil companies (IOCs) like ExxonMobil have not invested in future production as had been hoped; new technology has not dramatically improved recovery; and wells drilled over the last few years have nearly doubled but production has remained flat. Yet demand continues to rise and per-capita usage in the US and Canada is little changed."
Based on Nelder's findings at the conference, he noted that there was a strong consensus among experts (not Wall Street analysts and oil-happy bloggers), that the global peak of production is estimated to occur between 2010 and 2013.
Of course with peak oil looming over us like an ominous black cloud, some are using this as an opportunity to push for more domestic drilling too. You know the song and dance — just keep drilling at any cost.
A Very Brief Respite
If you read my most recent article on tar sands, you're well aware of the environmental damage associated with tar sands production. But what about all this offshore stuff? You know, the oil that'll come online well after the global peak of production, and provide absolutely no relief to the average Joe trying to fill his tank.
In an effort to push the "drill more" agenda, overwhelmingly we're seeing folks bypassing the real solution — utilizing alternatives to oil that we all know exist and can be integrated economically. Instead, polls are showing voters in the U.S. are getting quite drill-happy, and really dismissing the very obvious environmental impacts of offshore production. And it's not as if there aren't any recent events that can serve as a reminder.
After Hurricane Ike crashed down in the Gulf, we heard reports of oil platforms being destroyed and pipelines being punctured. As a result, about a half million gallons of crude oil spilled into the Gulf and the marshes and bays of Texas and Louisiana. And certainly we remember how Hurricanes Katrina and Rita demolished 113 offshore oil platforms and overturned storage tanks at onshore refineries. 9 million gallons were spilled. To put that in perspective, 10.8 million gallons were spilled into Prince William Sound in 1989 after the Exxon Valdez blanked the shores in black.
It is unfortunate that new offshore production is likely to happen — despite the avalanche of reason and logic that dictates that this is a very bad idea. However, the reality is that no matter how much they drill, gas prices will not stay low enough to deter progress in fuel efficiency and Plug-In Hybrid Electric Vehicle production.
GM is not going to stop production on the Volt, Honda isn't going to hold back on its latest hybrid offerings and Toyota isn't going to retire the Prius. The fact is, none of this development would even exist if it wasn't for the fact that the days of cheap oil are over. Certainly consumers may enjoy this brief respite from high gas prices, but it won't last. And auto manufacturers know this. Why else do you think every new car on the road will have some degree of hybridization by 2020?
That's right — every new car on the road by 2020 will have some degree of hybridization. That's what the IBM Institute for Business Value found after conducting a series of interviews with 125 auto industry execs in 15 different countries.
For consumers, we're very close to having many new options that will allow us to purchase vehicles that use much less gas, or no gas at all. Personally, I'm ecstatic about what the future holds for the electrification of personal transportation. Especially if that electricity can be generated using renewable resources.
And for investors, this is an opportunity to hone in on those high-performance battery companies that are going to provide the "fuel" for tomorrow's hybrid, plug-in hybrid and all-electric vehicles. Especially now that many of the publicly-traded companies in this sector are trading at record lows.
Bottom line: They can push the oil agenda all they want, but they can't magically put more cheap oil in those wells. And they certainly can't stop progress. We'll see to that!
To a new way of life, and a new generation of wealth...