Recent sharp rises in oil prices have allowed billions of dollars to flow into the coffers of energy interests, which could eventually be reinvested in energy projects once environmental and political restraints are removed. While drilling in Alaska is one prize, offshore drilling on the West and East coasts and the Gulf Coast are other areas of interest. Oil shale, oil sands, coal bed methane, coal gasification, gas-to-liquids projects, new oil refineries and natural gas liquification installations could become realities. Projects like these were on the drawing boards during the last major energy crisis of the 1970s. Energy-efficiency measures and the eventual collapse of oil prices curtailed most of them.
If peak oil predictions are right and oil supplies have peaked, and prices continue to climb, we will be forced to rethink how we use energy. While tight oil supplies leave us vulnerable to sudden price spikes from disruptions, a gradual transition from oil could help avoid major economic stress and a rush to implement environmentally destructive energy projects. The mere mention of $100 a barrel oil is sure to create pangs of anxiety. Yet, in terms of todays prices, oil reached the equivalent of $90/barrel in the late 1970s.
Rising oil prices can be viewed as a blessing in disguise if they lead us to curtail our excessive consumption of oil and our tendency to sacrifice environmental quality. As oil prices rise, alternatives become more cost competitive. According to David Morris of the Institute for Local Self-Reliance, many energy efficiency measure are economically competitive with oil at $5/barrel, and biofuels are competitive at $45/barrel.
Amory Lovins of The Rocky Mountain Institute sees high energy prices as an opportunity to end our dependence on foreign oil and make-money in addition. He recommends completely ending the use of oil as a sensible money making opportunity. In the book Winning the Oil Endgame, Lovins and his colleagues offer a blueprint for getting off oil within a few decades. The strategy involves doubling the fuel efficiency of cars, trucks and airplanes and later replacing gasoline with alternative fuels such as ethanol and hydrogen.
High oil prices are broadening the base of support for curtailing oil consumption. In a surprising development, a group of 31 former national security officials joined forces with environmental interests and recently urged President Bush to take action to reduce U.S. oil consumption by improving the fuel economy of autos and developing alternatives to fossil fuels. They see our dependence on imported oil as a risk to our homeland security and economic well-being. James Woolsey and Frank Gaffney, both of whom backed the war in Iraq, seek to end our dependence on oil from countries hostile to us. High oil prices provide more opportunities to fund hostile groups.
Whether peak oil is upon us or not, high oil prices send a signal to Americans to reconsider our wasteful lifestyles. Instead of feeling hopeless, we should begin talking about the benefits that can come about if we take local initiatives. It is an opportunity to reverse our energy-intensive patterns of urban sprawl, improve our public transportation, increase the energy efficiency of our buildings and appliances, buy more locally-grown, organic foods and install renewable energy sources. Such actions will strengthen local economies, create jobs, clean up the air and improve the environment.
From the April 13-19, 2005, issue