Worrying About Big Oil

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By JLP | May 5, 2006

I just saw Why You Should Worry About Big Oil in Business Week about the problems big oil is having or will have. The article mentions the possibility of gas at $6 per gallon! Can you imagine? Reading it doesn’t give me the “peaceful, easy feelin’” that the Eagles sing about.

Countries like Bolivia and Argentia that are nationalizing oil are not going to help matters any. I guarantee you that we have not seen the last of the nationalizing efforts. The bad attitude inside me wishes that the prices for their commodities would fall through the floor. That’ll teach ‘em.

We HAVE to make ourselves LESS dependent on oil. Listen to me, I sound like a green person. I’m not. I just see the writing on the wall. Something is going to have to change or we are going to be in for a world of hurt.

Here’s one idea that might work. The original article in the magazine had a picture. I’ll see if I can try to find it. UPDATE: Okay, here’s a pdf version of the original article.

Topics: Miscellaneous |

Comments to “Worrying About Big Oil”

butters Says:
May 5th, 2006 at 4:11 pm

Europeans already have $6/gallon gas (that’s $3 gas + $3 gas tax, as far as I understand) and they survive. Yes, I agree we should make ourselves less dependant on oil, especially foreign oil, but there is no short-term solution. It seems we’re stuck with ever increasing prices of oil for the next 10-15 years and longer if we (the government) continue to float stupid ideas like $100 “rebate” instead of addressing the issue at hand (by e.g. raising fuel economy standards, building more refineries, etc.).

I advocate hedging oil prices by buying oil stocks e.g. in your 401K. Yes, oil prices can fall and your oil stock portfolio can lose some money, but this is what hedging is all about: you gain at the pump. Oil prices go up: you lose at the pump but gain in your 401k. It all works, though, unless “windfall taxes” and other socialist crap is implemented by congress.

Vladimir Stojanovski Says:
May 5th, 2006 at 10:30 pm

Et tu Brutus?

There is nothing wrong in being dependent on oil, per se. To paraphrase one thought, there is probably more oil on our earth then we can find uses for it. What’s troubling is our dependence on FOREIGN oil.

While Castro is drilling 75 (or was it 45?) miles of the coast of Florida, and Mexico announced the biggest find in the Gulf, our elites are against drilling 125 miles off our coast (or whatever the latest proposal was).

Oh, but wait: I think we should indeed drag the ExxonMobil CEO in front of our wise senators. That will surely put more oil at the pump and lower the price of oil. Just for the sake of comparison, I read somewhere that in the state of NY, taxes currently amount to 60-80 cents per gallon. Now, compare that to the 9 cents per gallon profit that Exxon is making. Who’s gouging who, hmmmmmmm???

sam Says:
May 6th, 2006 at 1:21 pm

I have seen the “SuperGrid” idea before, and haven’t been that impressed with it, although some of the elements of the plan, like advanced reactor technology, are worth pursuing.

I think that SuperGrid suffers from the same problems as some other grand energy ideas such as the Hydrogen Economy; that is, creating an entire energy infrastructure from scratch. Looks too much like a top down, 5-year-plan sort of thing. In my experience (27 years in the utility industry as an electrical engineer), incremental, evolutionary changes to the existing infrastructure make more sense than “scrap everything we have now, and build something completely new” ideas.

I think a bottoms-up solution works better, using a variety of technologies. For transportation, liquid fuels are by far the best solution in terms of energy density (power and driving range). The problem is to find liquid fuels that don’t come from countries we don’t like much. Ethanol, and biodiesel are both promising, if they can be produced in quantity without huge gov’t subsidies. There is disagreement about how viable they are. Oil from shale (in my part of the country), or tar sand from Canada show promise also, but are more expensive to produce and have environmental problems associated with them.

Gaseous fuels are more of a problem (hydrogen, nat. gas) because it is more difficult and expensive to store enough to go as far as most people want to. And the infrastructure just isn’t there now. Electricity poses the same problems; you can’t store enough of it to make it attractive for cars. That is why the auto companies have pretty much abandoned electric cars and gone to gas/electric hybrids.

So, my belief is that we need to look for more and better sources of liquid fuels from all possible sources - fossil, renewable, or whatever.

Mighty Bargain Hunter » Roundup for the week of 1 May 2006 Says:
May 7th, 2006 at 12:46 am

[...] AllFinancialMatters talks about the problems big oil will be having, as well as the handwriting on the wall. [...]

Bob Griisser Says:
May 14th, 2006 at 7:25 am

A few things about your post-Bolivia is a land-locked country. Thier energy source, that they have nationalized, is natural gas not oil. Due to the extremely high cost of transporting LNG (Liquid Natural Gas) by sea Bolivia’s customers are the neighboring countries of South America.

We often hear about how we must hate the Saudis because they are the reason for the high fuel prices. the Saudis have less of an impact on fuel prices than most American s be,ieve. 46% of our oil comes from countries in this hemiphere. Canada is fast becoming a major supplier to the USA.

I must agree with Sam, we must develop many sources of energy. I believe that the days when we have a one-source energy economy are gone. I forsee the days when we will heat our homes with solar, run our cars with hydrogen, generat our electricity with nuclear and solar and wind, cook with natural gas and tap into our geothermal resources as we can.

Our quest for energy is fast depleting our wealth and redistributing it overseas. I recently read that the Iraqi War (really fought for oil?) has cost the USA 380 billion dollars. This would have put solar electricity at $20,000 per home on 19 million homes. This would have put a hell of a dent in our oil imports. This is strictly a financial view. Has the Iraqi War killed the person that would have developed the cure for cancer, the great leader that would have brought 10,000 years of peace to the earth, the scientist that would have found the enegy solution for the next million years?

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Worrying About Big Oil