Washington Hides From Oil's Demise
When I was in the seventh grade, I brought home my first bad report card. Needless to say, my father was not happy. He asked me why I was getting a "D" in History. I had a long list of reasons:
* The teacher didn't like me.
* It was first period and I was tired.
* The kid next to me kept distracting me.
* Maybe the teacher made a mistake.
* It's too hard.
The list went on and on. But my father wasn't having it. He told me that I needed to stop looking for excuses, and start making some progress. Otherwise, I'd be grounded.
Too bad we can't do the same with our elected officials!
Offshore Drilling — Another Excuse to Avoid Progress
Instead of finding a long-term, sustainable replacement for oil, the dolts in Washington have spent decades chasing after any possible supply they can get their hands on. It doesn't seem to matter if it requires launching a full-scale war in the Middle East or lifting environmental restrictions that protect a wealth of natural capital. These guys are determined to feed the oil machine at any cost. But based on nothing more than the fundamentals of supply and demand, logic dictates that we focus not on finding more oil...but rather furthering the development of proven alternatives to oil as fast as possible.
Of course, logic doesn't typically take center stage when it comes to decision-making on the Hill, so we've continued to waste precious time debating the merits of a solution that's really no solution at all.
Today, our leaders our trying to force us to accept offshore drilling as a way to lower gas prices and provide more in the way of energy security. In fact, just a couple of weeks ago, in response to Nancy Pelosi's indication that the Democrats may be willing to consider opening more coastal areas to oil exploration, House Minority Leader, John Boehner said:
" Our message to Speaker Pelosi is very simple: We are ready to vote on more energy production and lower gas prices right now, and we should not wait one more day to begin giving the American people the relief they expect and deserve."
If you believe that one, I have a shiny new bridge to sell you!
The fact is, if we started drilling today, we'll have a very small flow of new oil coming online in about 8 years — figuring optimistically. This would be well after the global peak of production, and provide little relief to the average Joe trying to fill his tank. And you can be quite sure that prolonging the inevitable with new offshore drilling does not ensure energy security either. In fact, it could be argued that it makes us more vulnerable, as it could deter progress in transitioning to alternative fuels and transportation.
Of course, it doesn't stop there. After all, Washington's notorious for always having a back-up plan, complete with a convenient scapegoat.
Speculate on this!
I'm sure you've heard plenty about evil speculators and how they're causing the price of oil to skyrocket. These often come from reports that never seem to mention the rapid depletion of fossil fuels. So let's shed some light on this.
According to a report issued by the Commodity Futures Trading Commission (CFTC), the increase in oil prices between January, 2003 and June, 2008 is largely due to fundamental supply and demand factors, and not speculation. Here's an excerpt from the CFTC's report:
"If a group of market participants has systematically driven prices, detailed daily position data should show that that group's position changes preceded price changes. The Task Force's preliminary analysis, based on the evidence available to date, suggests that changes in futures market participation by speculators have not systematically preceded price changes. On the contrary, most speculative traders typically alter their positions following price changes, suggesting that they are responding to new information — just as one would expect in an efficiently operating market."
Why we can't focus on the real issue — which again, is supply and demand — is questionable. I don't have much faith in our elected officials to do the right thing. But I certainly don't think they're dumb enough to not understand that our once vast resources of cheap, easily-accessible oil no longer exist.
Either way, renewable energy investors will still come out on top when all is said and done. You see, they can try to drill their way out of this mess, and point fingers at speculators all they want. But the oil market will always remain unstable from here on out. And that, my friends, further validates the renewable energy marketplace.
To a new way of life, and a new generation of wealth...