World crude oil prices are now on the verge of reaching and even surpassing the $100 per barrel mark. Supply chain problems, a weak U.S. Dollar, and high demand has resulted in an international energy crises that threatens to plunge the world economy into a virtual tailspin. Countries which consume a high amount of petroleum, including the U.S.A. and China are trying to secure enough supplies to satisfy an almost unquenchable energy thirst. Many commodity traders and market strategists are predicting that the price of crude oil will go even higher, especially when the state of U.S. energy supplies are expected to be announced soon.
What is currently happening was actually predicted by fiction writers such as Ray Bradbury nearly 40 years ago. In fact, Bradbury, a renown science fiction writer during the 1950’s and 60’s wrote a surreal account of what might be the result of a world energy crises around the year 2000 with oil reaching the above price per barrel and remaining reserves so low that what is available is only for the military, and for operating farming equipment used to produce to food to feed a world population topping 8 billion. Bradbury wrote that the result would be Americans having to revert to lifestyle, transportation wise, that their great-grandparents had; i.e. back to the days of the horse and buggy.
Though this hasn’t exactly happened as Bradbury hypothesized, petroleum supplies are not meeting world demand, and the result is the current price situation. A truly frightening scenario of what might be coming down in only two years time was noted on a popular television news channel when a group of people which included former US Army commander in Iraq John Abuzaid, and a top former member of the Treasury Department were involved in a ‘what if’ dramatization occurring in the year 2009 – only two years from now. In this scenario, crude oil is now priced at $145 per barrel and gasoline is selling in America at more than $5.00 per gallon, with long lines at gas stations reminiscent to the oil crises of the mid 1970’s. The American economy has been plunged into a deep recession and unemployment is hovering at the 12 percent mark. To make matters worse, Iran, estimated with possessing close to 15% of total world oil reserves, has just announced that it now possesses nuclear weapons and is cutting off its oil exports to most countries, especially ones like the U.S. which have been “unfriendly” to the Islamic Republic. As a desperate measure, gas rationing has been introduced on a scale not seen since World War II.
And Israel, which itself has to import more than 98% of it’s petroleum supplies, has just announced that unless other nations become involved, it would have no option other than stage a “first strike” attack against Iran “with all necessary military options on the table” (meaning the possible use of it’s nuclear arsenal against the Iranians).
While this scenario hasn’t yet become reality, what is frightening is that is could occur as early as two years from now. A new president will be occupying the White House and most likely a foreign policy agenda that could be quite different that what has emanated from Washington since the invasion of Iraq in March, 2003. The new Administration, especially one controlled by the Democratic Party, might be more willing to compromise with countries like Iran and Saudi Arabia for the sake of obtaining more petroleum supplies. And that compromise might be one that would force Israel to pursue a military strike option against Iran.
Alternative energy measures, including using more hybrid automobiles, solar energy, hydrogen and fuel cells will eventually reduce world dependence on “black gold”. But these measures may take several more years to become viable enough to push petroleum into the background as a major energy source, and relegate it to being more important for use in the petrochemical and related industries. After all, fuel cells have been talked about for over 40 years. This is also true of developing cars and other vehicles that would run solely on electricity – possibly even powered by solar panels. The technology is currently available, but the major oil countries have shelved many of these innovations in order to continue making high profits.
The rising price of oil is also pushing up the price of gold, now above $800 per ounce. And while gold has much less ‘practical use’ than oil, it is a yardstick measure of inflation and financial crises.
The profits of the oil companies may be coming to an end, however. To reinforce this stark reality, an appropriate quote was once made by the famous American comedian and actor of the 1930’s, Will Rogers, when he said in respect to petroleum: “they ain’t making it anymore”. And sure enough, this is so true.