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.

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

This week T. Boone Pickens announced a new program that will report our monthly foreign oil purchases.  This is a great way to focus our attention on this vital problem by using real numbers to track progress in reducing imports.  We can set goals and then meet our objectives.
 
How significant is our oil dependence?  The numbers are staggering:

• Spending nearly $20 billion on 380 million barrels in December 2008
• We spent approximately $475 billion on imported oil in all of 2008
• Every minute we send $432,000 overseas to feed our addiction

The transfer of wealth is wrecking our economy while foreign countries realize the benefits.  This is taking money away from our domestic programs at a critical time.  Wouldn’t you rather see this money spent on roads, schools and government projects here in the United States?

Last July, Pickens unveiled a plan to increase the use of wind power and natural gas to cut U.S. dependency on foreign oil.  This would create millions of jobs building out our wind capacity and upgrading our national electric grid.  All of this would have a very positive effect on our economy.

Developing oil alternatives is just one half of the puzzle with the other half being conservation.  Gradually changing our sources of energy would be nicely complimented by all of us just consuming less.  Attacking this problem from both sides will result in dramatic reductions of imports.  I look forward to getting these monthly updates as a yardstick to measure our progress.  Will you be watching?

I saw this story on Monday that oil futures may rebound from their current low price.  The predicted increase is based on OPEC cutting production and the economy picking up in the second half of 2009.

So oil prices may increase next year?  Well some analysts are predicting that demand will continue to drop which will keep prices low.  Others think demand will rise and oil prices could quickly spike if new investments are not made.  The point is, even the experts do not know, so we should not get comfortable with low prices.  We know that at some point the price of oil will surge again and this will result in high gas prices.

The question is what can we do in the interim?  We have to take the high prices of the summer as a serious warning.  Further reductions in supply or a sudden increase in demand could sharply drive up prices.  We must aggressively seek gasoline alternatives while actively improving our conservation efforts.

Wouldn’t it be great to send a message to the rest of the world that U.S. citizens can curb their appetite for fossil fuels?  We all need work together during a difficult economy to ensure that changes in our daily commuting habits have a long lasting impact.  Passenger Energy is everyone’s chance to make a contribution starting 2009.  Do you agree?

photo credit: underminingme

Yesterday was Veteran’s Day and I found an interesting post at the Daily Breeze which said the following:

The irony of Veterans Day, which we observe today, is that while most government workers get the day off, for our troops on two battle fronts and at bases around the world, it will be business as usual.

This is very true.  Most US citizens are free to go about their daily lives because of the sacrfices of present and past military personnel.  We all need to make a better effort to free ourselves from foreign oil and stop sending money to countries that don’t like us.

If you did not a chance to thank a veteran yesterday, then do it today.  We always need to show our gratitude for the hard working men and women of our armed forces.

photo credit: eagle102.net