DISRUPTIVE OIL

DISRUPTIVE OIL.
by Bruce Mulliken, Green Energy News

With Libya headed towards full scale civil war it could take years before its oil exports resume to pre-violence levels. The world will just have to get by without the nation’s meager contribution – 2 percent or so – to global supplies.

It is outrageous that shutting off the tap from a relatively minor oil player should have any impact on global markets: There’s plenty of oil out there. The U.S. Department of Energy’s Energy Information Agency most recent data (2007) shows U.S. imports from the North African country as statistically irrelevant. Why then should U.S. drivers pay a high price for oil they do not burn? The excuse from oil marketeers is that the unrest might spread to other nations in the region such as Saudi Arabia. Now THAT would be a problem.

Until that happens – if at all – the oil companies will profit handsomely from lives lost and the likely collapse of the nation.

It has been said that alternative energies are disruptive: Potentially, renewable energy and energy efficient technologies could disrupt and displace status quo conventional energy sources such as oil.

However, it is also obvious that conventional energy, particularly oil, is also disruptive. Rising oil prices could disrupt economic growth at a time when fragile economies are just starting to recover from the Great Recession.

The price of oil has been on a saw tooth, up and down curve for decades, but in recent years the swings seem greater with more peaks between of periods of relative calm. Generally though during these years of price swings, oil has become more expensive with the saw tooth-curve pointing up.

There always seems a be a problem with oil. Poorly managed supply, bad weather, and of course civll unrest in producing nations all are reasons for price peaks that create instability. In price, oil can no longer be relied upon as a stable source of energy. This instability of price is no way to build and sustain economies. Industrial nations, such as the U.S., need reliable and price-stable sources of energy to prosper: Energy makes industrial nations work. Consumers, business and industry like to know what things cost and will cost, as best they can, so they can plan ahead. Unstable oil prices don’t allow that.

It seems insane to continue to rely on unstable and ever more pricey energy to fuel economies, when alternative energies are actually dropping in price.

During these same years of unstable oil prices, alternative energies, have steadily, albeit slowly, decreased in cost and increased in reliability and predictability. Consumers, business and industry are rarely hurt when the cost of something they rely upon gets cheaper. They benefit, of course, instead.

It’s true that oil is mostly related to transportation and that renewables such, as wind and solar, are for stationary uses. However as the link between cars and the power grid connects with electricially-powered cars, renewables will become a real challenge to oil.

Fortunately, as this oil crisis begins, the U.S. now has a wider-array fuel-stingy, hybrid and electric vehicles available than just three years ago when the last major oil spike hit. If oil remains high more people will switch to these cars and trucks. But not everyone will. Instead many will be calling for more drilling (Drill Baby! Drill!). Yet even with the potential for more domestically produced oil, there is no guarantee that the price of oil and the price of gasoline at the pump will drop if more oil is found. As above, the price of oil is determined by players in the market from around the globe, not by the oil producing companies.When the market is driven by fear of tight supply, prices go up. When the market is driven by a feeling of secure supply, prices go down. Markets are driven by emotion, not cold hard facts. There would have to be huge discoveries of new oil in order to make oil feel secure in the market. Right now there is no indication that those supplies exist.

So oil will continue on its wild ride causing disruption economies until safe, stable alternatives are seen as the smartest energy choice.

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