Yet, despite the obvious long-term need to adopt these "alternative" approaches to our nation's energy needs, it's troubling that Washington feels the necessity to trump market forces by making alternative energy's production a federal mandate. For instance, if ethanol is all that its advocates represent, such a mandate would prove unnecessary because market resources would naturally flow to its development. This is especially true today, in an economy with unprecedented levels of available private and venture capital, whose managers are acutely focused on finding the next big thing.
What's troubling amidst all the hype around ethanol, however, is that these market forces have historically viewed ethanol with some degree of trepidation. That may someday change completely; in fact, it appears to be changing at least partly now. But it would be more appropriate to let those market forces flow to our next energy resources, whatever they may be, as opposed to mandating one of them--ethanol, as Congress is doing. That's more a political victory for one special interest than it is a long-term energy policy; federal corn lobbyists: 1, America's energy interests: 0.
The uncomfortable and too seldom discussed reality is that it is oil and natural gas that still drive this economy, and no alternative energy source has yet emerged to definitively supplant it. That may not forever be a fact, but it is the fact today and it will likely remain a fact for at least several years to come as alternatives are evaluated, funded and pursued.
Meanwhile, oil and gasoline are not, for at least three primary reasons, coming cheap.
First, the cost of oil is influenced by some degree of geopolitical risk still factored into its pricing. This past May, for example, Saudi Arabia arrested 172 suspected al Qaeda and other militants. At first word of this development, oil futures soared, as the market confronted the uncertainty of the incident and its ramifications. However, by the next morning, as it appeared that Saudi forces had in fact foiled a fairly large Saudi-based terrorist cell, futures prices dropped just as quickly as they rose, ultimately falling lower than they were before their original escalation on the theory that Saudi Arabia may finally be getting serious about eradicating the al Qaeda threat on its own territory. Such price volatility proves only that this is a very jittery petroleum market looking over it's shoulder, well aware that dangerous geopolitical threats linger.
Second, the escalated price of oil is equally attributable to classic supply and demand forces, with supply negatively impacted by the fact the U.S., even amidst this era of enhanced geopolitical uncertainty, has failed to drill sufficiently for oil on our own soil, which would reduce our dependence of these foreign uncertainties. An estimated 10 billion barrels remain undrilled on a small part of the Arctic National Wildlife Refuge (ANWR), for instance, and off of U.S. coastal waters, European and other nations are right now drilling for oil in areas where our own Congress has prohibited such drilling by American oil companies. And then there is the growing demand for petroleum in the world's fastest growing economies, such as China and India, where consumption is increasing dramatically, but the global supply is not rising to meet it.
Article comments
1 - Dr Dreadful
Tiny quibble:
It's the Strait of Hormuz, not Straight.
2 - Christopher Rose
That's dire!
;-)
3 - Clavos
...aand it's not even a straight strait...
4 - Dr Dreadful
Should the body of water between San Francisco and Tiburon be called a gay?
5 - REMF
^ at least it's straighter than munchkins...
6 - Clavos
You are a bad boy, Doc!
7 - Franco
Well written and informitive ipinion pieces.
Right off of U.S. coastal waters……..European and other nations are right now drilling for oil in areas where our own Congress has prohibited such drilling by American oil companies.
Why?
it will be important that our currently untapped U.S.-based oil reserves are available and sufficient to carry this nation through such a crisis. The time to ensure adequate access to these petroleum resources is not once the U.S. begins its response to Iranian aggression. The time for that preparation is now.
What's holding up the show?
8 - Ruvy in Jerusalem
Petroleum is an important material for making things like computers and other packages that do not contain food or drink.
But truth be told, for liquid fuel, or any other purpose, it is not needed at all. The tchnology to replace it is already here, and can be developed in short order....
When the firms come out with those materials, it will be a pleasure to see the faces of all the oil execs and their ba(n)ckers who now think they are in the catbird's seat, as they suddenly realize they are as expendable as Burger King employees.
9 - Clavos
"off of U.S. coastal waters, European and other nations are right now drilling for oil in areas where our own Congress has prohibited such drilling by American oil companies."
Off the US coast??? That's the first I've heard that.
Exactly where?
10 - Clavos
"When the firms come out with those materials, it will be a pleasure to see the faces of all the oil execs and their ba(n)ckers who now think they are in the catbird's seat, as they suddenly realize they are as expendable as Burger King employees."
Ruvy, Ruvy, Ruvy...
Who do you think is going to be supplying those materials? The oil companies--already, they are all spending billions on R & D for alternative fuels; they're not just OIL companies, Ruvy. They are ENERGY companies.
And they're not stupid. If some one else comes up with a good alternative fuel, they'll buy (or steal) the process. They are not about to go out of business any time soon.
11 - Dave Nalle
Clavos has a good point. Shell and BP are among the world's leading producers of solar panels (made from petroleum byproducts) while Chevron is going into the alternative fuels business on a large scale with ethanol and biodiesel.
Dave