We have seen a relentless rise in the price of oil and related energy during the last few years. This is not due to some conspiracy on the part of Oil companies, nor is it due to OPEC, it is simply due to economics. Specifically, the laws of supply and demand.
On the supply side, while there is still plenty of oil around, it is getting ever more expensive to acquire. Gone are the days where a wooden derrick in Texas could drill a few hundred feet and strike oil. Now, we have to drill thousands of feet through water or Ice on a derrick that costs over $50 million to find oil. Needless to say this makes the total cost of oil higher! Even worse on the supply side as the rest of the world industrializes to catch up with the US, Europe and Japan, they too must consume oil. In just 20 years China has transformed itself from a country of over 1 billion people clogged with bicycles to over 1 billion people clogged with cars. There is no going back to cheap oil. In fact, in all likelihood it is going to get a lot more expensive as new oil gets even more difficult to reach and transport home. At some point it might even make sense to bulldoze the Rocky Mountains for shale oil.
So imagine you have an asset that is going up in value faster than the rate of inflation. Do you sell it? Of course not! If anything you try to buy it from others stupid enough to sell it. Unfortunately, we in America are too short term selfish and are choosing to live cheap at the expense of our future children.
I submit we should stop consuming ANY of our own oil, and buy all we can from other countries. Save ours for the days of much higher prices, or when nobody has any oil left! Of course this decision would transfer a significant amount of wealth to people we prefer not have it, so we should also go on a crash conservation program. Democrats already know the public would disapprove of a gas tax, so they hope to mask it by calling for a "carbon tax" that can be passed on as a gas tax. Either way we need to conserve as well. But in the meantime, lets save some of our greatest assets for the future. Stop drilling our own oil!
We need to develop new alternate sources of energies as well. BUT as you will see in my following blogs, they won’t solve the problem and may make it even worse in some cases! The good news is the higher oil prices go the more viable alternative energies become! If you want energy independence to come sooner, STOP drilling our own oil, as it will accelerate the economic viability of alternative energies.