My B-in-L Bob, a very senior BP exec (now retired), is the one who initiates the “Oil is a bubble” discussion. All the inflation adjusted charts seem to only go back to include the 1970s — and that’s not far enough to show the true price trend of oil. Bob argues that Oil has been in a very long downtrend, and the 1970s price spike was an aberration. So too, the 2003-05 run up. A longer, inflation adjusted chart would reveal that the present spike is aberrational, and unlikely to be sustainable. I am somewhat incredulous of this claim.
His point however, is well taken. While he is expecting an eventual mean reversion, simply base dupon price, I have a similar expectation based upon market cycles. The next recession (there’s always a next recession, just as there’s always a next recovery) will see reduced demand for Oil, and that will allow prices to fall.
Category: Energy
Energy Bill Offers Tax Breaks
After five years of trying, Congress is expected to clear an energy bill this week that provides a range of incentives for consumers to rein in energy use.
Here’s how the energy bill could affect what we buy:
• Incentives to buy fuel-efficient appliances
• Incentives to buy hybrid vehicles
• The extension of daylight-saving time
• Expanded use of ethanol as a gasoline additive
• Reliability standards for power grid (aimed at preventing blackouts)
• Incentives for installing solar power at home
Congress Wants to Expand Daylight Savings Time to Save Energy
Reader Erika Frederick emailed this article by John Fialka:
As a step to save energy, Congress appears poised to extend U.S. daylight-saving time for two months, starting it earlier, on the first Sunday in March, and ending it later, on the last Sunday of November.
The move was first approved in May as part of the energy bill by the House. The idea has now been agreed upon by House and Senate committee staffs, with the approval of both Republican chairmen and ranking Democrats. That means it is likely to be approved by the full House-Senate conference committee, which begins squaring the differences between the House and Senate versions of the bill this week.
The change is not without controversy:
The Air Transport Association has asserted that its members, long-distance American airlines, could lose millions of dollars because of schedule disruptions that the proposal would cause by throwing U.S. arrivals at foreign airports out of synchronization with European schedules and Europe’s system of awarding “slots,” or landing rights at airports.
Some large church groups also oppose extending daylight-saving time into the early spring and late fall, because it would require children to wait for school buses in the dark. “Without the light of day, they are more susceptible to accidents with school buses, or other motorists, and the darkness also provides cover for individuals who prey on children,” said the Rev. William F. Davis, deputy secretary of the U.S. Conference of Catholic Bishops, in a letter written to the House sponsors of the measure
The proposed change is part of the Energy Bill.
Ethanol: More Trouble Than It’s Worth?
Farmers, businesses and state officials are investing millions of dollars in ethanol and biofuel plants as renewable energy sources, but a new study says the alternative fuels burn more energy than they produce.
Supporters of ethanol and other biofuels contend they burn cleaner than fossil fuels, reduce U.S. dependence on oil and give farmers another market to sell their produce.
But researchers at Cornell University and the University of California-Berkeley say it takes 29 percent more fossil energy to turn corn into ethanol than the amount of fuel the process produces. For switch grass, a warm weather perennial grass found in the Great Plains and eastern North America United States, it takes 45 percent more energy and for wood, 57 percent.
Slashdot discussion
The Long Emergency
It has been very hard for Americans — lost in dark raptures of nonstop infotainment, recreational shopping and compulsive motoring — to make sense of the gathering forces that will fundamentally alter the terms of everyday life in our technological society. Even after the terrorist attacks of 9/11, America is still sleepwalking into the future. I call this coming time the Long Emergency.
Most immediately we face the end of the cheap-fossil-fuel era. It is no exaggeration to state that reliable supplies of cheap oil and natural gas underlie everything we identify as the necessities of modern life — not to mention all of its comforts and luxuries: central heating, air conditioning, cars, airplanes, electric lights, inexpensive clothing, recorded music, movies, hip-replacement surgery, national defense — you name it.
The few Americans who are even aware that there is a gathering global-energy predicament usually misunderstand the core of the argument. That argument states that we don’t have to run out of oil to start having severe problems with industrial civilization and its dependent systems. We only have to slip over the all-time production peak and begin a slide down the arc of steady depletion.
I wonder if we will see oil prices crater, like it has after previous spikes?
Nanotechnology & Solar Power
Investors along Sand Hill Road in Menlo Park [CA] are pouring money into solar nanotech startups, hoping that thinking small will translate into big profits.
Both inventors and investors are betting that flexible sheets of tiny solar cells used to harness the sun’s strength will ultimately provide a cheaper, more efficient source of energy than the current smorgasbord of alternative and fossil fuels.
Nanosys and Nanosolar in Palo Alto — along with Konarka in Lowell, Mass. — say their research will result in thin rolls of highly efficient light-collecting plastics spread across rooftops or built into building materials.
Canadian Oil Sands
Robert Collier visits Alberta’s vast oil sands:
Alberta’s oil sands are destined to be the main supply of foreign oil to the United States for at least the next century. The sands hold proven reserves of 175 billion barrels, second only to Saudi Arabia’s 262 billion, and far more than the Arctic National Wildlife Refuge’s estimated 10 billion.
If Americans want to keep filling their gasoline tanks at a reasonable cost, they will need the oil sands industry to push ahead on its expected path of doubling, tripling and even quadrupling production in coming years.
Nowhere else is the conflict between energy use and ecological cost so stark.
“The oil sands are a big challenge,” Canada’s environment minister, Stephane Dion, who has fought publicly with other Cabinet officials for a tougher line on global warming, said in an interview. “They are sending out a lot of greenhouse gas emissions.
Economist Survey: Oil
Interesting and thought provoking set of articles on “Oil in troubled waters” from the Economist:
“THE time when we could count on cheap oil and even cheaper natural gas is clearly ending.” That was the gloomy forecast delivered in February by Dave O’Reilly, the chairman of Chevron Texaco, to hundreds of oilmen gathered for a conference in Houston. The following month, Venezuela’s President Hugo Chavez gleefully echoed the sentiment: “The world should forget about cheap oil.”
Running Out of Cheap Gas to Guzzle
A few weeks ago, the price of oil ratcheted above fifty-five dollars a barrel, which is about twenty dollars a barrel more than a year ago. The next day, the oil story was buried on page six of the New York Times business section. Apparently, the price of oil is not considered significant news, even when it goes up five bucks a barrel in the span of ten days. That same day, the stock market shot up more than a hundred points because, CNN said, government data showed no signs of inflation. Note to clueless nation: Call planet Earth.
Carl Jung, one of the fathers of psychology, famously remarked that “people cannot stand too much reality.” What you’re about to read may challenge your assumptions about the kind of world we live in, and especially the kind of world into which events are propelling us. We are in for a rough ride through uncharted territory.
Hybrid Cars: Plug Them in Overnight?
Ron Gremban and Felix Kramer have modified a Toyota Prius so it can be plugged into a wall outlet.
This does not make Toyota happy. The company has spent millions of dollars persuading people that hybrid electric cars like the Prius never need to be plugged in and work just like normal cars. So has Honda, which even ran a commercial that showed a guy wandering around his Civic hybrid fruitlessly searching for a plug.
But the idea of making hybrid cars that have the option of being plugged in is supported by a diverse group of interests, from neoconservatives who support greater fuel efficiency to utilities salivating at the chance to supplant oil with electricity. If you were able to plug a hybrid in overnight, you could potentially use a lot less gas by cruising for long stretches on battery power only. But unlike purely electric cars, which take hours to charge and need frequent recharging, you would not have to plug in if you did not want to.