Friday, February 25, 2011
The Monster from the Black Lagoon...
Well, here we go again....on a dizzying cable-car ride up the mountain of gas prices. Libya gets dicey....the per barrel price starts getting revved-up...and we're off and running. But, have you noticed that Libya provides only less than 2% of the world's oil, and most of her oil fields are being protected by the Libyan military, which has already defected from the control of apparent lunatic Muammar al-Gaddafi? And, despite the fact that none of that oil comes to the U.S. it is still all the excuse needed to fuel a speculative frenzy...the only losers of which are US. Nevermind that the barrels that are being 'sold' at higher daily prices will not reach the refineries and eventually our gas pumps for months....the rule is: "Rabbit up...Tortoise down." It must be a considerable source of delight to the oil companies that the gas already sitting in the tanks of refineries and gas-stations all over the country shoots up in value instantly as it keeps pace with the per-barrel price on the world markets.
The big question that is lurking in the back of most peoples' minds--well, not Charlie Sheen's maybe--is how far will it go this time? Where will it finally stabilize? And, on which one of these periodic run-ups will it just keep right on going? The talking heads are saying that $4/gal. is a given by summer....just in time to fleece all the vacationers, eh....and, depending on how the wildly unstable political balance in the Middle-East shakes down...or sheikhs down?....we might see the oil supply shrink well below world demand. If the worst fears of radical Islamic proliferation are realized in the region, withholding oil is a wonderful way for them to make us 'feel the pain' of Jihad. In fact, it could easily be the longest and most powerful lever they have to use against us, the 'infidels'.
So, what did we learn the last time around on this little merry-go-round? When gas blew past the $4/gal. mark in '08, people did finally decide to drive a lot less, and the sales of gas-guzzlers plummeted.....briefly. But, the oil industry may have realized that they had reached the point of diminishing returns in which more expensive gas was not going to make them as much profit as slightly less expensive product would....if they couldn't sell it at the same volume levels. So, I am guessing they were feeling their way to a price range at which people would still buy and drive gas-guzzlers, go on driving vacations, basically ignore the pain, and carry on as usual. That would be a kind of 'sweet spot' pricing for them. I have a feeling that the pharmaceutical companies set their prices in a similar fashion, looking for the point above which people will go without....but, because many simply cannot, and because it is insurance companies who pick-up the tab in many cases.....passing it along to their insurees eventually, of course--- they can be more aggressive in setting that breaking point of 'pain vs. profit'. I don't believe for a minute that any question of 'doing the right thing' or a sense of conscience plays a role in either industry. Nah.
If this delicate balancing act, however, is upset and spins out of control on one of these forays....all bets are off. Try to imagine how the U.S. and the world's economy--they are essentially one and the same at this point--would function if oil just keeps on spiraling upwards towards utterly exotic prices. Some projections estimate that prices north of $400/bbl. are possible in such an eventuality. Much has been written about the concept of 'peak oil'. Many experts on the petroleum industry believe that we have already passed the point beyond which world-wide production will never again be fully sufficient to meet the ever growing demands. The inevitable result of this is that oil and all attendant products--fuels, fertilizers, plastics, chemicals of all kinds...essentially, the weight-bearing pillars of our entire lifestyle--will just continue to go up in price as supply falls ever shorter of meeting the balooning demand. There is nothing but a train-wreck at the end of these tracks...but, although we--at least most of us--know this, we just keep right on hanging out the window of the locomotive, squinting into the wind and steaming on down the line.
Some imagine that science will come up with ingenious solutions, miraculous advances in the energy field that will yank our fat from the fire just in the nick of time. Ah, yes, TECHNOLOGY will save us all. Seriously? Do you really believe that fanciful thought is worth hanging your hat on? Hell, the whizz-bang scientists can't even figure out what to do with nuclear waste...and they have been working on it for about a half-century. So, what IS the answer then? Well, there are a host of people out there with alternative scenarios that they have been working on and making them into realistic, achievable and even appealing ways of living. All of them involve accepting the fact that life with oil that is exotically dear will not closely resemble the life of Reilly that we have been so completely addicted to and taking for granted. NOTE: this does not mean that such alternatives involve either draconian austerity, or are odious in their day to day ambiance. They are just not the energy saturated and luxury dependent life-style of today. There IS another way of living; most just cannot or will not allow themselves to imagine that it could become critically necessary.....or that this could happen in a painfully short period of time. The less time there is to adapt to such a dramatic scenario the more likely it would be that the process would be a painful and chaotic one.
If you look at this society through a wide-angle lens, taking the long view, from the vantage-point of the Fool on the Hill, human nature seems to be saying that we'll keep right on hurtling down those polished steel rails, like Casey Jones....until we actually see the headlight of the train we're going to hit. In the ballad of Casey Jones, he remained at the controls of his locomotive, trying to stop the train in time....while his brakeman, Webb, jumped. Neither alternative seems all that appealing really. It would be a lot less painful to just pull onto a siding. But, for that to happen, there would have to be a massive epiphany, dwarfing even the one that swept communism out of Russia in 1989....and, as I look around me these days, what I see is a society that is so steeped in selfishness, self-interest on every level....that--try as I might--I just cannot seem to imagine that happening.
I hope I am wrong. But, when we finally see that other headlight....it will be way too late.