Thursday, April 24, 2008

When OPEC gives you lemons, turn them into Oil

Ahhh the heady days of spring. Warm weather brings the return of baseball, fly southern ladies looking gorgeous on SEC campuses, and of course the yearly rise in gasoline prices. For years oil prices have risen around this time because of increased demands during the summer months. This year however, has taken the oil price increase to an extreme. With prices of a barrel of crude oil approaching 120$ dollars, the average gas price have increased sharply to an average of $3.50 across the nation. While these prices are finally catching up with the rest of the world average, here in America it is being treated as the apocalypse. Americans won't be able to get to their jobs! Americans won't have enough money to spend on groceries!! Americans need to invest in covered wagons and oxen and restore the Oregon Trail!! While this hyperbole was meant to humorize a very real reality for many poor Americans, it brings up a larger point. Our country has become completely reliant on a finite commodity that was bound to rise in price in the face of war, increased worldwide demand and decreasing resources.

American society has very stupidly bought into the idea that oil was an infinite commodity, and that oil prices would never rise to present levels. American politicians very stupidly allowed this to happen because they were being financed by the giant oil companies. And now because of this, the entire framework of our society is being antiquated on a daily basis. The very people complaining of gas prices are the people who were short sighted when they bought their third SUV, or bought a house 2 hours from their job, or supported a war in the region of the world that produces the most oil in the world. And while we can look back and laugh at these people every time they pay 150 dollars to fill up their Hummer, the true blame should go to the US Government for being so short sighted in case of an impending shortage of oil. Did they not see that population rates were increasing worldwide meaning demand would rise? Did they not see the modernization of countries like China and India which meant that the US would no longer control oil production and distribution? And did it not see the need for alternative fuel sources and modes of transportation in the face of decreasing availibility of oil?

It isnt much of a revelation to realize that oil is running out on our Earth. Major reserves such as the North Sea and Saudi Arabia see decreasing reserves. Closer to home, Alaskan and Venezuelan reserves are also decreasing not because the oil companies are hoarding the oil, but because there simply isnt enough to pump out!! Even that ANWR field in Alaska that Bush and Cheney worked so hard to open up would only supply America with one year's worth of oil at current rates. The bottom line is that there simply is not enough oil to go around, which is precisely why its so stupid to build an economy on its very shoulders. I guess Bush's answer to this was to go to war with Iraq to try and get their oil, but we can all see that its not really going to well and that there should probably have been more ideas considering before choosing the Iraq avenue. Even if the war was going swimmingly, it still doesn't stop the fact that so many more countries in the war are needing more and more oil that the demand would outstrip any price reductions Americans would see from increased oil supply.

Now, as oil prices inevitably rise, we have millions of Americans unable to balance the added cost of gasoline in the face of a very weak dollar. And while it may be idealistic to say the situation can get better, the truth is it really can't. American infrastructure is so woefully prepared for a world with high oil prices, that our economy will continue to falter for the forseeable future. Just wait until United Airlines goes bankrupt in a few weeks, merges with Continental and airline prices rise to astronomical prices to cover fuel costs. Or just wait until trucking companies go bottom up and the prices of all commodities they carry skyrocket. And since so many of our largest business centers and connectibility between these business centers rely on energy-demanding modes of transportation, the present problem will no doubt continue to grow worse and worse. I live near Atlanta and was shocked to see that there really no mass transit at all. Sure there's a few MARTA lines and busses, but there ain't shit for the guy who bought his house in Conyers an hour away from his job and requires his car to get to work. And since local goverments are for some reason so resistant to mass transit, there is no hope of a commuter rail line or comprehensive transit system for 10 years at least. Furthermore, its not just Atlanta with a problem like this. Because of American's desire to move into the leafy suburbs outside their supposedly "dangerous" cities, places like Phoenix, San Diego, Houston, and Dallas among hundreds of others have no real way to cheaply move around the people that create their economic viability.

So what do we do to solve this problem? Well there are a lot of directions on which to turn but Young Swole has identified 4 possible solutions to the problem...

1. Demand government to change their energy position. Its sadly visible how this adminstration coddles to the oil companies, basically Exxon got Bush elected in the first place. But times and situations have changed at it is no longer acceptable for our country to be so hand-tied by one such commodity. Not only is it inherently dangerous in placing our country's well being in the hands of such a volatile commodity, but its also ridiculously short sighted in the face of all the issues we are facing in the 21st century. Until our government chooses to separate itself from its reliance on oil and be able to think for themselves about how to solve these problems, it will continue to destroy our country.

2. Start mass transit programs, like yesterday. It is absolutely mind boggling howAmerica can be so stupid in its ways of moving people. Infrastructure simply cannot keep up with the demands of an increasing population. The best solution is to follow European and Asian models and increase mass transit. Every city should at least have some bus lines to move people around, and larger cities should have an extensive network of rail lines to cheaply and efficiently move people around. Just imagine if Chicago or New York didnt have mass transportation. Would they really be the economic leaders they are today? The answer is no, because those very people who create the economic backbone of these cities wouldnt be able to get any work done because they'd be stuck in traffic all day. Until America realizes that mass transit isn't some hippie Euro bullshit idea but instead an absolute necessity to economic survivability in the 21st century, our nation and economy will continue to quickly degenerate.

3. Learn to rely on sources of energy other than oil. In the face of Earth Day and the oil price saga, large corporations and goverment pay lip service to developing alternative energy sources. Nothing has really gotten done yet because they are not willing to invest the money required to not just create an alternative, but instead a solution to the oil problem. Things aren't getting any better with oil, but it seems like the people in power believe that alternative energy should just be a supplement to oil, instead of becoming the major source of energy for America. What they don't realize is that the entire economy will break down as long as we rely on oil, and that there will be nothing left to spend money on if all we have is money to spend on oil. I guess they don't realize that if a source of energy can be developed in America, we would no longer have to pay exorbitant rates for something like oil and no longer have to get involved in clusterfucks like the Middle East. In fact, if America could find a source of energy that the rest of the world would demand, then it would be able to mend a broken economy and in fact make our country flourish. Dubai was built because the UAE had something that everyone else wanted. I refuse to believe that America is too dumb to come up with a solution if the proper resources are given to those people who can find it, and if we can do this then not only will our present problems be solved, but also America's future will be much safer.

And finally, if America is too stupid to initiate any of the ideas above (which is sadly a 99.9% certainty), and thus inevitably falls behind the rest of the world, then i offer suggestion 4....

4. Buy a bike from my dad. Seriously he's got like 6 of them


Young Cicero said...

Nice expose. I don't have the time to read it in detail right now, but I would also advocate that:

1. The government stop stockpiling so much oil in the strategic oil reserve. We already have enough there to cover any short-term crisis, and the government's hoarding is a major factor in driving up prices, a la the way DeBeers Diamonds (VanDeKamp Diamonds in the movie Blood Diamond) buys up all the conflict diamonds to maintain market scarcity.

2. Suspend/Reduce the fuel tax during the summer months when prices invariably rise. John McCain and several members of the House of Representatives have already advocated a fuel-tax holiday that would last from Memorial Day to Labor Day.

Young Cicero said...

I just tried to find this editorial cartoon I saw a few years back but couldn't.

But basically, it was a picture of a Middle-Eastern Sheik standing next to a gas station with the fuel pump in his hand. Next to him was Uncle Sam in a tank, saying "The question is not if I can afford to fill up. The question is if you can afford not to fill ME up."

I used to think that when gas prices got this redic that we could just lean on OPEC and make our displeasure known, but I think that the problems we have had in Iraq are showing OPEC nations that they can stand up to the U.S., especially now that the country would never go for ANOTHER war in the middle east so soon. Even a few months ago, when President Bush dispatched Cheney go to and lobby the OPEC leaders to increase supply, results were nonexistent. Difficult times for all.

Young Swole said...

I guess i agree with those 2 suggestions, but the problem is they are superficial. Those changes will help, but they won't *solve* the high price issue. Something must be done that changes the game once and for all.

Young Knuckleballer said...

you have way too much time on your hands

Kyle said...

I completely agree:

"Did they not see that population rates were increasing worldwide meaning demand would rise? Did they not see the modernization of countries like China and India which meant that the US would no longer control oil production and distribution? And did it not see the need for alternative fuel sources and modes of transportation in the face of decreasing availability of oil?"

Especially question 3. Seriously, car makers in the US like GM and Ford would not be in such shitty situations had they not been bought off by the oil companies in the late 80's/early 90's. They drank the kool-aid and are now struggling to stay afloat as insightful companies like Toyota seemingly reap the benefits from an economic state of affairs that Americans either overlooked or, more likely, were too caught up in their suburban lifestyles to realize.

Go green!

And, for those of you doubters like Bryden Cory and Logan Dickmeyer, FMV will still be cheap and I will continue to save money eating quality food for less.

Young Taco Maker said...

reducing the fuel tax would only make the problems worse later down the line, although it would make people happy in the short term because they wouldnt see their cash flow reduced. i think that kind of tax reduction scheme would just fuel our debt even farther (making china happy in the process). the point is, we have to pay for our consumption in one way or another.

i would say reduce the tax break that oil companies get, but then they would just turn around and fuck the consumers with even higher prices.

so......unless we all start biking/taking transit everywhere, grow our own foods, stop eating meat (a major source of energy consumption that leaves a huge carbon footprint), recycle EVERYTHING and stop farting so much, we're pretty much fucked as a species.

we could wait for the miracles of technology to solve our problems, or we could face the fact that human beings cannot collectively live together on one planet if we all live like Americans do. thats why i found a way to run my computer off of vegetable oil to write this post.