Peak Oil is You
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Page added on April 14, 2012
Let’s hear it for higher gasoline prices
Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.
— U.S. Secretary of Energy-designate Steven Chu, 2008
Of course we don’t want the price of gasoline to go up, we want it to go down.
— U.S. Secretary of Energy Steven Chu, 2012
Gas prices are on the rise again, which means the “man on the street” will complain to local news reporters about greedy oil companies and foreign cartels, and energy-illiterate pundits and politicians will cry for domestic drilling with wild abandon.
But is gasoline, now approaching $4 per gallon in Ohio, really expensive?
Consider that a barrel of West Texas Intermediate crude oil, trading for around $100 per barrel in March 2012, is equivalent to 10,000 hours of human labor. The work of one person over their lifetime (about 45 years of manual labor) can be done by just four barrels of oil, which costs $400 today. That’s not a bad deal compared to the annual salary, healthcare costs and pension that an employee would receive over 45 years.
Gasoline—and all our fossil energy—has been absurdly cheap over the last two centuries. Even today, fossil fuels are relatively inexpensive for the power they deliver to consumers, companies and governments. Oil’s cheapness has given us economic growth, industrialization and consumerism. And it’s also given us overpopulation, overconsumption, toxic pollution, the depletion of soil, water and rare earth metals, and habitat destruction and its corollary, species extinction.
Solutions that make petroleum less expensive not only make that long list of consequences worse, they delay our inevitable transition away from finite, fast-depleting underground fuels. If we delay the transition, then we will have a larger, more developed global population that’s used to a high-energy lifestyle by the time the shortages hit and rationing kicks in. In short, low oil prices now mean more people, corporations and nations fighting over fewer resources later.
So why don’t politicians call for more expensive energy to curtail use? That would be a more rational response for a world on the brink of energy scarcity. If households find out their income source would soon be drastically reduced, wouldn’t it make sense if they stopped their spending spree and started to save?
Instead, we drain our bank account of accumulated fossil capital at ever-faster rates. Between 2001 and 2011, the world consumed about 260 billion barrels of crude oil. That amount represents about 20 percent of all crude oil ever consumed. Demand and population, especially in China and India, are growing exponentially. If China and India’s oil consumption continues at present rates, they would gobble up all of the available net exports of oil in the world in just 19 years, leaving none for any other importing country, according to petroleum geologist Jeffrey Brown.
U.S. Secretary of Energy Steven Chu added an enlightened sentiment to the energy conversation in 2008 when he suggested that the U.S. should try to increase gasoline prices to the level in most European nations, which is roughly double that of the U.S. In January 2012, a German motorist paid an average $8.19 per gallon to fill up, compared to the $3.58 per gallon paid at an American pump, according to figures from the U.S. Energy Information Administration.
Chu’s announced goal in 2008 was right on target. With much higher domestic prices, solutions like use of mass transit, smaller vehicles and smart growth happen naturally. America would be less dependent upon oil because new housing construction would take place within walking distance of shops and workplaces. New passenger rail lines would connect distant destinations. Wind, solar and other sources of renewable energy would get a boost. Relocation of agricultural production in and near cities would save energy and money and improve food security. Thus, when an even more serious oil crunch comes, American households and communities would be better adapted to survive as fuel costs would be a smaller percentage of total living expenses.
But Chu recently told reporters that he changed his mind since 2008 and that he has actually worked over the last three years to reduce oil prices. This may be political maneuvering ahead of the November presidential election. Or it may be that Chu thinks Americans are too dumb to understand that in the long run they would be better off with higher fuel prices.
It would be refreshing if a few politicians and pundits talked about (without retraction) how high oil prices would secure America’s fossil fuel-free future, and if at least a few Americans told the media how happy high prices made them for the sake of their country.
Last year oil companies cried that ending their government subsidies was un-American and would raise gasoline prices. The truth is that more expensive gasoline would encourage positive changes in the U.S. economy making Americans more self-reliant, less vulnerable to oil price shocks and shortages and more resilient in the face of future economic downturns or Middle East turmoil. That sounds pretty American to me.
15 Comments on "Let’s hear it for higher gasoline prices"
BillT on Sat, 14th Apr 2012 11:39 am
The best thing that could happen in the US is for gas prices to do a steady climb of about $1 per gallon per year and never stop. That would force changes before we go to the pump someday and it is shut down, permanently. Politicians have no idea what is going on or do not care, because all they think about is re-election, not what should be done. Short term thinking will bring disaster long term.
rebecca on Sat, 14th Apr 2012 1:12 pm
I would imagine that most Ammericans feel that, like owning a car that gets whatever gas miliage they choose, they also have a right to cheap, cheap gas.
The next several years are going to be a real shock to a lot of people.
Gale Whitaker on Sat, 14th Apr 2012 3:33 pm
Or civilization is headed for the depletion cliff at breakneck speed. This article would have you believe that or problems will be solved if we install wind turbines and take the bus to work. Without cheap energy to build them there will be no turbine and no bus. I am afraid that articles like this do more harm than good because they don’t paint the true picture of the problem at hand. Please note that all great civilizations in the past have failed. I think this one will fail too.
Kenz300 on Sat, 14th Apr 2012 4:09 pm
Right wing radio talkers and faux noise are doing a disservice to the country and the world by saying their is no limit to resources and all we need to do is drill.
THe Republican party is tied to the oil and coal companies. They love it when oil spices spike. They make huge windfall profits.
Plantagenet on Sat, 14th Apr 2012 4:17 pm
Obama and main stream media talkers are doing a disservice to the country and the world by saying there is no limit to resources and the high price of oil is only due to wall street speculators—not resource limits.
The democrat party is tied to the environrmentalist movement. They love it when oil prices spike. They want to price of gas to go up high enough to cause another recession.
DC on Sat, 14th Apr 2012 7:00 pm
While it would great to see obese amerikans finally starting to pay something like the true cost of gas, a problem still remains with this approach, as great a thing as it will be to see.
In the United States of Oil, high gas prices go almost entirely to the oil-cartel, not to the state. $10.00 gas would a windfall for the cartel, tho demand destruction will reduce that windfall somewhat, it wont entirely. Since amerika barely taxes gas, and its not even a %, but a FIXED amount. In the civilized nations, pretty much all fuel is based on a %. So when it goes up, at least the govt collects more tax from it, which can at least(in theory) be used to help fund useful programs.
Not so in the US. Best result in amerikaland would be a broad-based anti-oil revolt, but more than likely what you see is more calls to invade other countries (preferably hostile to the uS) and steal there oil instead.(IoW the current strategy). And the right-wing will ramp up the blame for high gas on those ‘dirty arabs’ in the ME and enviromentalists at home(IoW the current strategy) Even many so-called ‘progressives’ in the Snakes have bought the govts war-of-terror cool-aid and seldom speak out against the mil-oil-wall st. complex.
Whatever way the United States of Oil responds, it will be good to see all those flabbys trying to walk to 7-11 to get there ‘light’ beer and pork-rinds.
Rick on Sat, 14th Apr 2012 11:48 pm
I want the price of gas to be so high in the US, so people can’t afford it, and so they wake up. It’s coming, like it or not. It will also bring on the collapse. It has to happen, and will.
MrEnergyCzar on Sun, 15th Apr 2012 2:01 am
I’ve spent $34 on gas the first 6,600 miles in my Volt…. Save a soldier, drive a Volt, power it with domestic energy…
MrEnergyCzar
SOS on Sun, 15th Apr 2012 4:01 pm
Oil is not responsible all the worlds good and evil. It has helped to eliminate poverty though, and poverty is a source of many of the worlds good and evil.
The article is hyperbole. It plays on strong politictical themes from the left. The reasoning is liiogical and consequently political.
What you should be taking away from this article is the fact the government does create “peak oil”. Chu said as much when he lamented on finding ways to get gas to $5. They are doing a pretty good job.
Stopping the Keystone was a step in that direction. Policies that have driven production down on federal lands by as much as 29% are certainly helping.
Restrictions and regulation is definitely having the desired impact on gasoline. Raising corporate taxes should help as well as should taking away all those subsidies and “tax loopholes” to “big oil” All are promoting, with success, the flat earth notion of “peak oil”.
The volt may be costing you less in gas but you are relying on everyone else to help you. Your volt cost well over $500,000 counting all the direct taxpayer subsidies, tax loopholes and government givebacks like your rebate.
All you are doing is taking money from the gas companies and the taxpayers and giving it to general motors while the rest of us are forced to pay artifically high gas prices.
SOS on Sun, 15th Apr 2012 4:05 pm
What wwe should be taking away from this article is the fact government does create “peak oil”. Chu said as much when he lamented on finding ways to get gas to $5. They are doing a pretty good job.
Stopping the Keystone pipeline was a step in that direction. Policies that have driven production down on federal lands by as much as 20% are certainly helping.
Restrictions and regulation is definitely having the desired impact on costs. Raising corporate taxes should help as well as should taking away all those subsidies and “tax loopholes” to “big oil”. All are promoting, with some success, the flat earth notion of “peak oil”.
The volt may be costing you less in gas but you are relying on everyone else to help you. Your volt cost well over $500,000 counting all the direct taxpayer subsidies, tax loopholes and government givebacks like your rebate and future tax loophole deductions for buying it.
All you are doing is taking money from the gas companies and the taxpayers and giving it to general motors while the rest of us are forced to pay artifically high gas prices.
Kenz300 on Sun, 15th Apr 2012 8:11 pm
The price of oil is rising due to the ever increasing demand from China and India. China is now the worlds largest auto market. The world oil supply can not keep up with the growth in demand for oil from China and India. We will all begin to change our habits and use of energy as the price continues to rise. We need walkable cities with bicycle lanes and paths. We need more and better mass transit. Fuel efficient vehicles are growing more popular as the price of oil rises. The world is beginning to change. How fast it is forced to change will determine the level of pain.
SOS on Sun, 15th Apr 2012 8:19 pm
The price of oil is rising because of pressures on demand. Supply is being restricted by the US Governement up and down the supply chain. This is causing much higher prices and some users are having ot cut back. We can have our cities any way we want them. High gas prices will not create your utopia. They will only make you broke.
Peak oil is a child of politics not a real physical constraint.
BillT on Mon, 16th Apr 2012 1:58 am
SOS, you are on the wrong track or highly delusional…lol. Peak oil is reality in capital letters. The price we pay for it may be manipulated a bit, but the fact is that if it were not in decline there would be no high prices and it would cost $20 a barrel like it did when there was all we wanted to use. You just want to blame your favorite scapegoat for your negative life style changes. Gas has been over $4 here in the Philippines for the last 4 years and is now over $5 in a land where laborers make $12 per DAY. Quit whining and accept that it is only going to get worse and worse as you get older. Soon you will be taking public transport or walking.
Charlie Bucket on Mon, 16th Apr 2012 5:57 pm
Amerika could be energy independent if we could figure out how to turn cellulite into gasoline. Bunch of freekin fat asses!
SOS on Wed, 18th Apr 2012 7:32 pm
I am not having negative life style changes. Why you take this to a personal level is beyond me. The truth is there, calling people names like delusional is a tactic of the weak mind. You may be above that billt, I dont know, you have yet to show it if you are.
Under this president drilling permits on federal lands are down 36% . All but 3% of federal lands have been closed to drilling. New well permits are all but noexistant. Most if not all are re-work permits.
Politics is at the core of peak oil. It is a flat earther type notion. The only way this situation gets worse is letting the politics run amoke like we are seeing. Workers in the phillipines are being exploited terribly by these politics but you say buck up to me? Im sorry but your logic fails.
Why should any suffer financially becuase of politics?