Friday, December 11, 2009

The upcoming oil shortage: part two

From the 14 December 2009 Greater Niagara Newspapers

By Bob Confer

Last week’s column focused on the global demand for oil and how the supply constraints of the precious substance brought about significant price volatility during the second half of the decade. I made the claim that high oil prices were just as responsible for the Great Recession as were the mass of foreclosures.

One would think that a problem of such a scale (and one that we had already experienced twice before during the 1970s) would have initiated some action on behalf of the powers-that-be in Washington DC and other government thrones the world over considering that the situation is bound to repeat itself sometime very soon, maybe in 2010 and definitely in 2011, as the world’s most-populous economies continue to grow.

But, alas, we live in a world led by short-term memory and short-term planning. Just as our government never enabled the free enterprise system to pursue new oil reserves following the oil crises of the 70s, our leaders (and even most citizens) have so easily forgotten that the pain at the pump in 2007 and 2008 caused significant financial hardship. It seems that the issue has taken a backseat amongst bigger issues of the moment both real (the stagnant job market) and perceived (global warming) as promoted by Congress and its followers. Subterfuges such as this focus (if not waste) our nation’s intellectual and financial resources – and citizenry’s thoughts and hopes - on things that may not need immediate attention. When the oil problem does resurface, that same leadership will do as they have with anything of importance and use a short-term fix destined for long-term failure, but one with immediate rewards (though small) that captivate the voters at a time most advantageous for the polls. That cycle repeats itself and that is why, since the 1800s, we’re always revisiting the same real crises every few years be it oil, health care, immigration, national security or education.

Had the issue been addressed before or when it came to a head we wouldn’t be treading into an all-out oil shortage that is destined to prolong the recession on American soil. If, when the economy was in good health and moving full steam ahead, the private sector was equipped, allowed and encouraged to invest in and develop new technologies that either minimized or negated the need for oil we would be further ahead than we are now and the future might no look so bleak.

But, an oversized federal government has stymied progress, be it through oppressive taxes and regulations, the enabling of the status quo in the automotive technologies or the provision to our children science-deficient secondary educations. Those are some of the reasons why you see the world’s sharpest young minds now being Indians and Chinese who come to the US to be further educated in the sciences and engineering in our very best universities, only to go back home to once-oppressive governments that now pursue and promote innovation and intelligence with the same vigor that ours used to.

Sure, we still have far and away the most innovative and advanced people and processes on the planet, but we seem to have hit a plateau in that regard at the same time that those other nations are trying to catch up to us. Therefore, they may be far more equipped and flexible than we to quickly roll out a plan to adjust to the oil shortage, ensuring the continued vibrancy of their economies.

But enough of what got us there and will get us there again. You may be wondering about the specifics of this shortage I speak of. Just how big is it? What will it mean to the world? That, dear reader, I will discuss in next week’s column. You will be aghast at the wool that has been pulled over our eyes.

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