Sunday, March 20, 2005

Gas & Oil: A View of the Future - Part II

As an ebb and flow in supply and demand is typical, seeing the tab for gas relax back to $1.90 or so during the latter portion of 2005 isn't out of the question. At the same time, I wouldn't be looking for it to descend well below that, nor to see it remain at such levels forever.

What about those posing the prospect of petrol hyper inflating, with oil approaching $100 for a barrel and gasoline going to $3.00 a gallon? Obviously, while anything can happen, my sense is that, should a spike to that extent
come to pass, it will not be long lasting.

Why not? Sensibly, James Flanigan of the Los Angeles Times cites the power of human nature: “Rather than sit idly by and let oil prices erode their standard of living, people will react and make changes in the way they do things. Industrial practices, technology, even our lifestyle — all of these will inevitably evolve, tempering the surge in petroleum prices.” As one point supporting his argument, Flanigan reflects upon how folks adjusted in response to the energy shocks of the early 70's. For access to the complete article, click here. (Free registration will be required)

The thought that people will become resourceful in the face of challenging circumstances has revealed itself before and it will again. An example of one innovation now available in the U.S. is
EnviroMaxPlus, a fuel catalyst that is relatively new to the mass market. EMP's primary benefit is to increase gas mileage, and it's a product that I believe worthwhile to promote. Standing alone, it can make a tremendous difference in fuel consumption. After looking at data on consumption, I've concluded that, were EMP to be used on a widespread basis, it would negate the need for the importation of any OPEC oil to the United States. Now that kind of impact is nothing to sneeze at.

To restate my conclusions, because of a sea change in demand flying in the face of a resource that has become more difficult to discover, recover and process, the era of $2.00 a gallon gasoline is with us to stay. This includes a good chance that prices in the coming months will go up 10% to 25% beyond the two buck benchmark before retrenching. And, while a larger escalation isn't beyond the realm of possibility, alternatives exist for people to discover and embrace. Individually and collectively, as people make the needed adjustments, the effects of exploding demand and restricted supply will be moderated, just not to the degree that we'll see 'cheap' gas again.

In the end, as always, time will tell regarding the accuracy of my prophecies. What's much more certain to me is that, separately and together, we are in charge of our energy future to a far greater extent than we may believe at first blush. Prognostications aside, that's some good news.

Back to
Part I


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