Let's talk about oil. It's black and ugly. And cheap.
Which seems an odd statement, because the price of gasoline is now at an all-time high after inflation has been accounted for. Partly that represents a temporary setback in refinery utilization. But the elephant in the gasoline living room is that we don't want those ugly refineries anywhere near our house any more. Nor near our neighbor's house nor even in the same state. In fact, this side of the mountains is probably much too close. So we haven't built a refinery in this country in 30 years, and the price of gasoline spikes every time a screw goes missing. Shock.
But, even at today's prices, oil gives us more energy bang for our buck than anything else we can come up with. Which is why we keep buying it, why demand keeps going up. While poets and artists demand that Scientists wave their magic wand and produce new cars running on hydrogen, back in the real world there's nothing better than stinky toxic gasoline.
Oil—follow the money. Because it's almost always the best choice for the consumer, demand stays high and continues to grow, no matter what the price. " The U.S. Energy Information Administration forecasts that total world demand for petroleum will reach 118 million barrels a day in 2030, up from 83 million barrels a day in 2004." But on the supply side, we seem to have peaked. The non-OPEC countries seem unable to produce any more; many former big producers such as the US and Mexico seem to be clearly headed for decline during the next 30 years.
Growing demand and limited supply mean only one thing: higher prices. Don't expect this painful market truth to be blurted out by demagoguing pols any time soon. We'll first see endless rounds of "oil policies" and "windfall profit taxes" which will cause—exactly as it did in the Seventies—long gas lines and plenty of misery. Unfortunately, when people don't choose to face the unpleasant facts they are often forced to face the horrific ones.
Observations on Tonight’s Debate
39 minutes ago