Inertia is threatening long-term energy strategies

Is the Energy Revolution, which seemed to have great momentum when U.S. gasoline prices topped $4 a gallon in July, going to be put on a sustained hold?

Could the stunning drop in oil and gasoline prices in the past five months, coupled with the brutal economic recession expected to extend deep into 2009, stunt energy advances and thus make us more vulnerable to unfriendly foreign oil producers in coming years?

The answer to both questions might well be “yes.”
A maze of energy ventures, ranging from oil recovery projects in Canadian tar sands to new U.S. wind farms, are being shelved as a result of plunging energy prices.

Oil prices, which eclipsed $147 a barrel in July, have plunged below $40 and some analysts predict that prices could dip as low as $25 next year. The average U.S. gasoline price has fallen from $4.11 per gallon to $1.64. Locally, some North Texans have paid below $1.40 a gallon.

Natural gas prices have also tumbled. Global oil consumption will drop this year for the first time since 1983.

In today’s environment, many expensive energy projects no longer make economic sense. We’re seeing the impact in North Texas, with the Barnett Shale natural gas drilling boom slowing and companies no longer proffering gold-plated, $30,000 per-acre lease bonuses to homeowners.

The collapse in energy prices, coupled with the recession and credit crunch, are also putting a damper on nuclear, wind, solar and other alternative energy projects, including development of hybrid and totally electric cars. Toyota is delaying finishing a Mississippi plant that would make the Prius hybrid.

Star Telegram