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  • Tuesday, January 25, 2005


    The End of Oil

    Just started reading The End of Oil: On the Edge of a Perilous New World by Paul Roberts. So far not much new to me but I'm impressed with his ability to explain and lay out the facts about the world's energy future. I'm fairly sure that the limits of the world's oil reserves have been known for 40-50 years. The general prediction for extreme crisis for the current energy economy has been about the year 2035. A few factors I don't think were included in that estimate: the exceptional rise in SUV usage in the US and the rapidly developing fuel consuming economies of China and India. Factoring these in and I'd say we have much bigger problems to worry about before Social Security.

    Before 2000, worrying about 2035 seemed unreal and very far in the future. 2035 is now within the timeline of a 30-year morgage on a house. That certainly puts it within easy conceptual measurement for me. Given the acceleration of consumption, 2035 may be optimistic. Personally, I'd invest in solar panels now.

    With this in mind, it's very understandable what the US government has been doing in the Mideast. Iraq has, what, the third or fourth largest oil reserves in the world. I also think we will continue to see companies with investments in oil working to wring the greatest amount of profit out of the situation. Every level of energy consumption that relies on oil will grow more and more expensive. At the same time, profit margins will bring larger amounts of money into the companies as the price goes up. Example: 10% profit on $1.00 is .10 cents; 10% profit on $10.00 is $1.00. Oh, you don't think gasoline will reach $10 a gallon? I think we'll see it before the end of the decade. The price will be whatever the market will bear and scarcity will do a jitterbug dance on "supply and demand".

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