Oil prices headed back up – $70/barrel as of this morning

When the price of oil skyrocketed last year the pressure was on for several things to occur. First, there was growing sentiment to drill here on our own land for more of our own oil. The price we’re paying for foreign oil is some serious coin and those funds aren’t all going to people we should be dealing with in the first place. Friendly or not, it puts America’s security at some level of risk to have someone else’s hand on the energy spigot. Second, the effect of the rising costs was to make some alternative energy sources more attractive and that was directing more development dollars toward things like “green” energy and alternative-fuel vehicles and power generation. Both of these things were, I believe, net positives for America and I was hoping they’d continue even without $4/gallon gas at the pumps.

As we’ve seen, when the prices started to relax in the face of a global economic downturn the pressure to pursue either of these goals diminished back to the point where people weren’t really thinking of them in the short-term. When those oil prices started coming down, many people were saying that we shouldn’t rely on that because they’d start coming back up again as soon as the economic situation appeared to be improving. Well, that’s exactly what’s happening:

Oil prices leapt above $70 a barrel Monday in Asia on investor expectations a recovering global economy will boost crude demand.

Benchmark crude for September delivery was up $1.12 to $70.57 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Friday, the contract rose $2.51 to settle at $69.45.

Oil prices seesawed last week before surging Thursday and Friday as investors bet that crude demand, which has been tepid this summer, will eventually pick up as the economy improves.

There is little reason to think that the price of oil – and that means gas, eventually – won’t come right back up to where it was last year or even higher. All the talk about how drilling for more of our own natural resources won’t help because of the time it takes to bring a well on-line ignores the fact that had we not listened to such tripe 10 years ago then those wells would have been producing right now when we need them most. Today is the soonest we can start preparing for our own energy needs and the fact that they won’t be ready for use tomorrow doesn’t make starting the project a bad idea. In fact, it’s the prudent thing to do.

At the same time we can start making it easier for people who want to deploy alternative energy sources to build and connect them to the power grid. Tax incentives will help the former, legislation the latter. We need to be building a lot more nuclear power plants than we have today and we need to be taking advantage of the 30 years’ worth of technological advancements in that field when we do. French-style fuel reprocessing will handle a large part of the waste issue and the additional nukes will provide the kind of power we need using proven technology available today.

I know there are issues with it, but I’m still more of a fan than not of the Pickens Plan of wind power generation. I think we can deal with the matter of converting our cars (and especially our truck fleets) to use natural gas and there are signs of real progress in putting workable electric cars on the road.

Rising oil costs are only going to keep going and every dollar we spend on foreign oil is a dollar not being earned by American workers who could surely use them. This rise we see is a wake-up call, if we’ll just reach over and pick it up.

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5 comments

  1. What “tripe” was that? The tripe that we could “drill, baby, drill” without consequence to the land we were drilling on? Or the tripe that we could drill our way out of this problem in the first place?

    As you’ve written before about your experience in looking at the EPA mileage listed on a *brand new* Dodge Charger, our vehicles have not exactly been designed with an eye towards easing ourselves off the oil-binge we’re still in the middle of. The one we defend to the death, literally. This country is still responsible for the most power consumption per capita on the planet, and until we change, the world doesn’t change.

    Oh and that last comment about dollars spent on foreign oil being ones NOT earned by American workers? Kinda flies in the face of globalization, there, which holds that the global economy is more important than any individual country’s economy. Mind you, I’d love to see less of that globalization, myself, since the only ones that benefit from it are corporate interests that have no loyalty to people or country. Only to profit.

  2. Hey, you want to get an attitude then open your eyes and actually read what I wrote instead of focusing on 3 words out of an entire post. I already said what tripe I was referring to right there in the paragraph I first mentioned it.

    You might want to update your Democratic Underground/MoveOn rhetoric manual and get your head out of the 1970’s as regards the oil industry. Things have changed. And I notice you’re not caring too damn much about the land they *are* drilling on, considering that those countries and regimes don’t have near the environmental laws we do. It’s fine and dandy that we’re paying them to drill over there but you don’t want to deal with the issue right here in our borders.

    And if the best answer you’ve got to America’s use of fossil fuels is that people should just turn off the lights and go live in a tent then you need to work on that a bit more.

    Globalization would work just fine if the money we were sending over there paying for oil when we have reserves right here wasn’t going to fund terror groups and dictators. You won’t see me defending *that* so take it somewhere else. And even with it there’s nothing wrong with wanting to see Americans directly benefit from American consumerism.

    It’s just amazing that I’m here suggesting that we need to take the steps necessary to position ourselves for the future by 1) using the energy reserves we have here at home before we send billions abroad so they can ship oil here, 2) start *right now* to invest in the alternative energy sources that will get us off fossil fuels in as short a time period as possible and 3) that we make it easier for people to develop alternative energy sources and technology and you’re here busting my chops over it. You want to find where the knee-jerk reactionism that’s polarizing everything this country is trying to get done today, you look in the mirror and have at. If all you’ve got is hackneyed leftist crap, then don’t go wondering why no one wants to listen any more. Some of us want to get answers to these issues working.

  3. Good thing there’s broad support for expanding the power grid to support all these new energy sources.

    Very good points overall, although I don’t have much regard for the Pickens Plan. I would trust it a bit more if he focused on investing his own money in the scheme rather than lobbying the government.

  4. Excellent points, GBW, and it’s one of the things about the Pickens Plan that I don’t care for. I mean I’m fine with the idea of needing legislative changes to clear red tape so large-scale wind generation can get started but the notion that it *has* to be a public works project is something I’ve never completely bought. I can understand the hesitation in fully embracing it.

    Our northern Virginia power grid is pretty well positioned to accept more inputs but it’s not that way everywhere, I agree. I would propose that seeing real progress on issuing new permits for power generation plants might spur the electric companies to upgrade. You think?

  5. The electric companies will be more than happy to upgrade. It’s the people who will oppose most expansion of the power grid. We can see that right here in Loudoun.

    We can expect a full blown NIMBY response to most efforts to expand the power grid to support more power generation.

    And then the enviro-nuts will step in to oppose new grids along with new generation plants, even “alternative” energy plants.

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