Crashing Oil Prices

What does it mean? Here are a few topics we could explore related to oil prices.

1. Saudi Arabia will not reduce production to stem the oil glut; why? Because they want American oil producers to disappear from the market. If they do, oil production will fall along with American CAPACITY to produce; and that means Middle Eastern oil exporters once again control global prices.
2. Big oil producers are examining the size and trajectory of future energy demand. They are finding plenty to go around and wonder how market demand in 20 years will be supplied without enormous market disruptions.
3. Oil supplies are finite – that is, there is a limit to their availability over time. One day there will be no more oil.
4. Meanwhile, new means are used to extract oil deposits from wherever they exist – fracking, shale oil, and others are but a few methods. Each of those methods has collateral costs and impacts on our planet’s ecology.
5. At what cost are we willing to pay for oil energy? Ever higher? Ever more dangerous to our environment? What is the limit we set for ourselves?
6. What energy sources exist now? What are their supplies like projected 20 years into the future? Can they replace some or all of oil energy when oil disappear from the globe?
7. Higher gas prices caused a near economic depression in the restaurant industry over the past 8 years. The national and regional travel industry took a hit from rising gas prices as well. Are these industries deserving of protection for our greater national good?
8. Falling gas prices in the past 5 months had these direct effects: more miles driven, pent up demand to do so; more eating out locally; more local shopping for Christmas and seasonal expenses; higher consumption patterns at local grocery stores. Are these effects worthy of our extending them? Are we doing what needs to be done to manage both energy demand and energy supply, and thus energy cost?
9. Are American economists paying attention to the issues that matter for the long term? Are they encouraging investors and industries to pay attention to these long term trends? Or are industrial leaders once again focusing only on the 90-day results and decisions that make them happen?
10. Do gas prices/oil prices demonstrate once again short term myopic thinking of American business leaders? And where are our political leaders in all of this?

I am not a broken record. This myopic thinking is actually happening in our executive suites. And because those suites make fabulous profits political leaders quickly learn to follow the scent of money and support executive suite thinking.

Many generations have now lived with this dysfunctional arrangement. Oil ought not control energy supplies and pricing. There are other energy sources to be explored and used for the good of the global community. For the good of the human race.

We can and must find clean, safe forms of energy that will reduce oil consumption and preserve oil supplies for the uses it is uniquely suited.

I thought leaders were supposed to focus on long term needs and well-being of society at large, not narrow markets, industries and interest groups. That’s a proper role of government in my mind: doing the right thing for the most people for the long term. It is not always profitable to do so. It remains the right thing to do, however. Thus it is rightfully in the hands of government not private enterprise which is charged only with making money for private investors.

When will we do the right thing and focus on future energy supplies at affordable cost and reliable supply? And who will do this valuable work?

Just a few questions. Oil prices will not always be this low and manipulated. Can’t we see beyond this noise and find the real objective?

January 23, 2015