I saw this story on The Oil Drum last week and found it very disturbing.  The story is entitled “The 88,000,000,000 barrel debt”.  They use some very simple graphs to illustrate this powerful message.  I highly recommend clicking on this link so you can see the graphs.

The first graph shows how US Energy Production has been almost constant for the past 30 years.  The second graph illustrates how our Energy Consumption has grown over that same period of time.  In the third and final graph, they show the ever rising debt.

So while the US Oil Production has declined over the years, we have compensated by producing more coal and natural gas.  Even with these changes, we have still consumed well beyond our capacity.  After studying the numbers, I put together this chart:

Do you see a shocking pattern in these numbers?  While it took us 12 years to accumulate a debt of 22 billion barrels of oil in the 80’s, we are now averaging a debt of 5.5 billion barrels a year.  At this rate, we will hit 100 billion by the end of 2010.  So much for Energy Independence.

I think that this just further illustrates that increased production of alternative energy will only help so much.  The real answer lies in reduced consumption.  Passenger Energy is one tool that could help close this huge gap between production and consumption.

On Wednesday, Australia suffered one of the area’s biggest environmental disasters when a cargo ship leaked tons of fuel oil into the ocean.  A massive clean-up is now underway along nearly 40 miles of east coast beach.

Initially the crew reported the spill was only 5,000 – 8,000 gallons, but later corrected their estimate to be ten times more, closer to 60,000 gallons.  The freighter was struggling in rough seas when some cargo came loose and punctured the fuel tanks.  The massive oil spill is bad enough, but the cargo causing the damage is reported to be 31 containers of ammonium nitrate.  It is believed that the 620 tons of chemicals in the containers have sunk to the ocean floor and pose another threat to the wildlife if not recovered soon.

As bad as this spill is, it does not come close to The Worst Major Oil Spills in History.  When are we going to learn?  This is just another example of the costs to our environment associated with the import of foreign oil.

I truly feel bad for the people of Australia and wish them the best in their clean-up.  We all need to seek clean alternative energy and continue to improve our conservation efforts.

You can find the song Gasoline on Sheryl Crow’s latest cd Detours.  I have always liked her music and I got to see her play live back in the mid 90’s, opening for John Hiatt at The Stone Pony in Asbury Park.  She has certainly come a long way since then.

I picked this song to feature this week since it accurately represents many of the problems we face with our current oil imports.  She picks a date in the future to show how foolish we may look when we review the incredible dependence we have today on gasoline.  In her clever lyrics, she touches on climate change, peak oil and the mistakes made by our government.

Give this song a listen and let me know what you think.  There are also several interesting live versions of this song on YouTube where she nicely segues into “Gimme Shelter”.

Way back in the year of 2017
The sun was growing hotter
And oil was way beyond its peak
When crazy Hector Johnson broke into a refinery
And the black gold started flowing
Just like Boston tea

It was the summer of the riots
And London sat in sweltering heat
And the gangs of Mini Coopers
Took the battle to the streets
But when the creed was handed down
For no more trucks and no more cars
They threw cans of petrol through the windows at Scotland Yard

Gasoline
Will be free, will be free
Gasoline
Will be free, will be free

There is a great article and running discussion on “The Economics of Volatile Oil Prices” at TheOilDrum.com.  The author, Phil Hart, does a very nice job breaking down the change in oil prices over the last few years.  He explains how the basic rules of supply and demand have had a powerful impact on the wild price fluctuations.

In the first comment, a reader points to the YouTube video below called “Gas Prices, Gas Gouging, Peak Oil, Elasticity, Supply Demand”.  This video simply demonstrates how the supply and demand curves have moved to cause the price spike and then recession:

As I read this article and watched the video, I gained a better understanding of the events of the last 3 years.  I also see how this cycle will definitely repeat itself in the next few years.  Once demand returns, prices will spike again.  It seems like we have a window of opportunity now to change our consumption habits before the next spike, but will we do it?

Last week I wrote a post entitled “Putting the Brakes on Offshore Drilling”.  In this post, there is a video from GreenPeace comparing our oil usage to drug addiction.  This is a very powerful metaphor that illustrates our urgent need for energy independence.

This week’s song is “Royal Oil” from the Mighty Mighty Bosstones.  I’ve read in a few places that the song is about drug use and how it can ruin your future.  As you listen to the song, I think you will agree it could easily be about our current oil addiction.

Royal Oil, come on bubble and boil.
Stabs like a dagger, makes you stagger on the hot tin foil.
Mind your mind or it will surely spoil, then you sleep down in the soil.
Nothing comes from nothing, come on Royal Oil.

When you smoke or poke the poison you lose the chance to be tomorrow.
Look out on the horizon and see the sadness, the pain and sorrow.
I can’t say enough about the stuff or what it has in store.
When you smoke or poke the poison you can’t be anymore.

Royal Oil, come on bubble and boil.
Stabs like a dagger, make you stagger on the hot tin foil.
Mind your mind or it will surely spoil, then you sleep down in the soil.
Nothing comes from nothing, come on Royal Oil.

Royal Oil has cut many down to size.
Spikes gonna strike the weak and strong alike.
And then forever, and ever close those eyes.
Make up your mind to keep your mind up and to your life be loyal.
Nothing comes from nothing, come on Royal Oil.

Royal Oil, big trouble brewing.
Long lonely road, long road to ruin.
Wrong path to take, great big mistake.
And then you sleep down in the soil.
Nothing comes from nothing, come on Royal Oil

Last week I wrote a post entitled “Putting the Brakes on Offshore Drilling” that looked at the government’s plan for longer review of offshore drilling.  I also discussed the many dangers associated with ocean drilling and why we need to proceed cautiously.

We should not toy around with ocean drilling

Well today, TreeHugger has an excellent piece called “Offshore Drilling: Worth the Oil, or False Hope?”.  They offer comprehensive coverage of this topic, including background information and answers to the following questions:

1. How much oil do we get from offshore drilling today?
2. How much might we potentially recover?
3. What offshore drilling is currently banned?
4. What are the environmental risks?
5. Does offshore drilling offer false hope of plentiful cheap oil?

I talked last week about the dangers, but I was under the flawed impression that it may be worth the risks.  According to this story, lifting the ban on offshore drilling would not have a significant impact for at least 10 years and even then it would only save us pennies on a gallon of gasoline.

We need to accept the fact that oil is a finite commodity.  No matter how much we increase exploration; there will always be a limited supply.  We need to look past these false promises and focus on true oil alternatives.

photo credit: dierk schaefer

We keep hearing on the news that oil prices are slipping, but when you go to fill up your car, the price of gasoline is higher.  Why?

According to USA Today, refiners are to blame:

• Refiners are cutting back on production
• Performing maintenance to reduce equipment utilization
• Decreasing the supply of gasoline on the market

The refiners are squeezing supply to match the reduced demand resulting in increased profits.  It is hard to blame them, since every other business would try the same thing, but we are all paying for it.  This just underscores how little control we, the consumer, have over the price of gasoline.

Between the refiners and then the speculators bidding up the price of oil futures, what are we to do?  Well they have control over the supply side, so our control can come from reducing demand.  Aggressively pursuing alternative energy and increased conservation are our only defense.  How do you plan to cut your gasoline consumption this year?

photo credit: Jacob Garcia

On Tuesday, Secretary of Interior Ken Salazar announced that they are adding a longer period of public review to the Bush offshore drilling program.  In a wise decision, the government wants to take more time to do the proper analysis before expanding this type of exploration.  There is more detail in this story entitled “Drill Baby Drill? Not so Fast: Interior Dept. Scraps Bush Offshore Drilling Plan”.

By adding 5 months to the review process, are we just delaying the inevitable increase in offshore drilling or is this a true change in direction away from this risky proposition?  In this story entitled “The Future Of Offshore Oil”, Dan Shaply cites the many dangers ocean drilling.  Hurricanes over the last several years have ruptured oil platforms and pipelines causing hundreds of thousands of gallons to be released into the ocean.  This along with oil spills from tankers present a serious threat to our oceans.

When gas prices were soaring to record levels, most people thought that offshore domestic drilling was a necessary evil.  Now that oil prices are way down, this option looks even less attractive.

We all understand the grim ecological objections against this type of drilling, but what is the alternative?  Should we, in the words of T. Boone Pickens, continue with the “greatest transfer of wealth in the history of mankind” to foreign countries that hate us?  Given this ugly option, I would definitely consider offshore drilling.  If you do not like either option, then you must embrace more aggressive conservation efforts to reduce our insatiable appetite for crude oil.

You may have seen these facts before, but they are well worth repeating again and again until we do something about it:

• We have 4% of the world’s population
• We consume nearly 25% of the world’s oil
• We only produce about 10% here in the U.S.

If we are going to protect our oceans for future generations then we need to take action now to break our addiction.  Let’s follow the government’s lead and put the brakes on our gluttonous consumption of this dwindling resource.  So instead of “Drill Baby Drill”, we should “Conserve Baby Conserve”.  Not too catchy, let me know if you have a better one.

Here is a story that caught my attention earlier today; Oil cost hedging is not fail-safe, as airline and consumer experience shows.  In an effort to eliminate their risk, United Airlines and a Metro-New York City housing complex wound up losing a lot of money.

The price of oil was so unpredictable last year, that some analysts were projecting $200 a barrel.  Trying to be proactive, United Airlines attempted to control fuel costs with hedge contracts to control soaring prices.  If prices continued to rise, they would be covered, but they did not anticipate the price collapse in the second half of 2008.  So instead of benefiting with cheap oil, they were locked in at the now higher rates.

Here are some very educated analysts who got it completely wrong.  You see, hedging does not eliminate risk, it simply minimizes it.  The exposure comes when markets move wildly against you, then hedging can lead to loses.

Normally you would think of hedging as a safe play and usually you would be right.  Unfortunately the volatile price of oil destroyed a smart plan that was just trying to protect against loss. This proves that we can not reasonably plan or predict the future of oil.

Are you willing to continue betting our economy on oil when we obviously have such little control over price?  We need to spread our risk over many other energy alternatives.  Now that is how we can properly hedge our bets going forward.

photo credit: stoneflower

Today was a historic day in many ways and we welcomed a new president.  There is so much coverage of this event that I do not have much to add.  I just wanted to highlight one line from President Obama’s speech:

“… each day brings further evidence that the ways we use energy strengthen our adversaries and threaten our planet.”

If you agree with this statement then you know we need to make significant changes in our energy consumption.  In the spirit of cooperation, please share any ideas you have on how to make Pay4Rides a reality.