A Hodge-Podge on Oil and Our Actions

Oil/Energy: Recommended reading for consumers – Informative article on oil prices and profits, essentially, both politicians and oil companies are omitting key facts from public conversations:

 http://factcheck.org/2011/05/playing-politics-with-gasoline-prices/

 When is peak oil? Depends who you ask:

http://www.fastcompany.com/1725372/wikileaks-may-have-just-confirmed-the-existence-of-peak-oil

Note: As a member of the U.S. military I am not allowed to view wikileaks documents so I am not able to confirm the allegations made in the above link.

Also, guest speakers on CNBC, fund managers from the commodities sector, were being grilled as to why they were so bullish on oil (The context was something to the likes of, "Why are you guys destroying our economy by driving up the prices of oil futures contracts"); their response: "increased demand from emerging economies, China/India and decreasing supply. Contrary to popular belief, proven reserves are decreasing by 6% per year and in 16 years there will simply not be enough oil at any price’.

 Again, I will cite CNBC as a source: Kramer has reported that Saudi Arabia had to drill twice as many wells this past year to maintain production levels of previous years. But then again, in other reports Kramer claimed that there is no actual shortage and then referenced tar sands and shale as sources that could provide ample supply for the future.

I personally, do not know where the truth lies on this subject. There are compelling arguments for both sides of the oil argument. However, I have learned that you have to pay close attention to the difference between terminology as, "reserves," "stated reserves," and "proven reserves" are very different terms and are key as to whether or not a statement is accurate. Another key fact is that production quotas are based upon reserves so this causes a considerable amount of pressure on oil exporters to fudge their numbers.

Last comment on oil: A couple of months back, while campaigning for the municipal election, I chatted with a Monrovian that is a senior manager for a global oil company (producer/refiner) and asked, “What’s in store for America’s energy future?”. The response was, “Conservation” and then he went on to explain that there simply aren’t any alternative energy sources or technologies available in the quantities needed that can replace crude oil. I was really asking the question because I wanted to know which alternative solution I should look to for investing opportunities and so I clarified my question and his response was, “Algae."  My company is placing the majority of their capital investments in to Algae. I see such a position by a major producer as tacit acknowledgement that; biofuels show profit potential and the argument of a virtual endless supply of oil are false.

What does this mean to us in Monrovia? As always the answer is, “It depends”. It depends on how we respond to this information. If we start switching to other energy sources and invest in energy efficient technologies then that 16 year estimate gets pushed back quite always. Or we can continue to act like Lemmings by continuing to do what we have always done and change our habits only when forced to do so and I suspect that scenario will most likely not be consistent with our core objectives/desires. One thing is for sure; in a capitalistic/free market society you don’t want to be on the wrong side of the supply and demand equation!

It is my recommendation that consumers increase efforts to diversify our transportation solutions. The next time you or your significant other buys a car, consider diversifying away from gasoline; for example diesel cars can burn biodiesel (In fact, there is a 5% biodiesel pump available in Arcadia at Huntington and First Avenue in the Chevron station (S/E corner) – currently it is priced almost 30 cents cheaper than pure petroleum diesel). Natural gas is another option but I think the crème de la crème is electric vehicles. Being an electric car driver for 6 years, I can testify that the experience has been a very pleasant. Refueling at home is the ultimate convenience, the acceleration, quiet ride are clearly superior to internal combustion engines. Here’s a good link on electric vehicle efficiency, which is the defining characteristic that I suspect will cause the EV to be the next technology for motor vehicles:

http://www.teslamotors.com/goelectric/efficiency 

However, I think the most profound reality to come from changing our consumer habits is the fact that we send a huge message to industry that, “consumers aren’t Lemmings so be reasonable or you will lose our business”.

For those that are considering a purchase: I am happy to share my knowledge if you desire more information on a subject. Either ask way here or call my mobile number: (626) 367-0637.