It’s only been a month since oil broke $100 per barrel for the first time ever, a landmark which comes less than four years after oil first broke the $50 barrier. As I write this column the price is hovering around $108 a barrel, and experts are projecting the price to go to $120 in the next year — possibly by the summer.
When Dubya Bush was elected in 2000, the price of oil was $35 a barrel, which means that the cost of the raw material we use to make plastics and gasoline has tripled in less than a decade. While the price at the gas pump hasn’t tripled as well — a function of more efficient refining, higher prices curbing demand, and other market forces — it’s looking pretty bleak.
How much influence U.S. foreign policy and economic policy has had on the price of oil is debatable, and would be irrelevant anyway in a few years as worldwide demand outstrips our current supply. These are the days of peak oil, not to mention peak profits for oil companies that are cashing in. Some critics are accusing the oil companies of anti-trust practices, essentially working as a bloc within the market to keep their margins high while profiteering from global situations like the war in Iraq, sanctions on Iran, conflict in Africa, and shaky economies and currency markets.
The oil companies themselves blame speculators for driving the price of oil up with the expectation that people will continue to pay more for the commodity. They’re betting the price of oil will continue to go up and up and stand to make a lot of money if the price surges again to $120.
Whatever the reasons behind higher prices at the pump, it’s time the world woke up to the fact that a century of petroleum-fueled growth is over. It’s the beginning of the end of an era, and change is coming.
That said, we will never run out of oil. As the supply diminishes its value will go up like any other rare substance or commodity, and make hard-to-reach or hard-to-refine deposits of fossil fuels more cost-effective to produce. We also still have huge reserves of coal, which can be processed into liquid fuel.
That, at least, is the paradigm that the oil and gas companies are clinging to, but ignores the fact that recent developments in alternative and renewable energy are driving the cost of alternative fuel sources lower at the same time the cost of gas is going up. When those two lines on the energy graph meet, marking an “x” on the page, the world will shift gears.