Posted on 07/06/2005 5:55:54 AM PDT by bryankdonnelly
Three cheers for high oil prices! Am I an energy industry executive or major stockholder? No, just a rational thinker who recognizes the genius of the marketplace. High oil prices are both an indication of increasing world prosperity and just the stimulus our economy needs to develop alternate energy sources.
1. Indicator of world prosperity: Why are oil prices going up? Some sort of dark conspiracy by Dick Cheney, Halliburton, and the Saudi oil sheiks? Hardly.
The reason oil prices are now above $60 a barrel is simple; greater competition for supplies. Great nations like China and India are rapidly liberalizing their economies leaving behind the utterly failed socialist model of the last century.
Collectivism produced nothing but the equalization of poverty, stagnation, and rule by a party elite of "proletarian" thugs and bureaucratic intellectuals. Ever since Deng Shaoping said "To get rich is glorious." China has embraced free market capitalism with both arms. As a result their economy has been growing at an astronomical 8-10% a year and huge areas of the nation enjoy growing living standards.
India, seeing their northern neighbor's success, began following a similar liberalization during the 90's. Now Bombay (Mumbai) and Bangalore are becoming wold technology centers. I deal with Indian tech folks daily and, absent the idiocy of socialism, they are superb.
In both cases, rapid economic growth produced substantial increase in the consumption of the "nectar of prosperity," oil. China and India are now large consumers as their economies expand toward "first world" status. What happens when demand increases? Prices go up! It's Econ 101!
2. Stimulus to alternate energy sources.
For years we've been told by environmental extremists that we must increase oil prices (through taxes) in order to limit consumption and encorage new sources of energy. Funny, now we HAVE higher prices but a lot of the same folks are once again predicting universal doom.
The free market will do exactly what the left wingers have been advocating; create new energy sources/technologies! Just a few examples:
A. Shale oil: At prices exceeding $50 a barrel, major companies are actively persuing this source. The shale oil reserves in the USA exceed the entire middle east.
B. Tar Sands: The Canadian province of Alberta has tar sands which also contain greater reserves than Saudi Arabia. At over $50 per barrel, they'll open up.
C. Nuclear power: Even the effete French occasionally do SOMETHING right. Our gallic friends now produce over 80% of their electricity via safe clean atomic power. Now that oil prices are up, perhaps the forces of reason will overcome the "nuclear is bad ju ju" ignorance of the left. We haven't built a new nuclear power plant in over 30 years, with light bills going up, Americans will approve new "nuke" plants.
D. Unused reserves: There are currently thousands of oil wells in West Texas' Permian Basin and southern Louisianna "capped," not producing. Why? Not economic at low prices. But at over $50 these wells are already being brought back into production.
E. Russia: There are literally thousands of square miles of promising but as yet unexplored oil areas in Russia. Believe me, in a capitalist economy, the Ivans will be out finding them.
F. New and marginal technologies: Such expensive and marginal energy sources as wind, solar, and biomass may even become economical and provide a somewhat increased share of our energy. Highly promising (but extremely costly research) technologies like nuclear fusion will go into "high gear." Our industries will also continue their highly successful conservation efforts.
PROBLEM SOLVED VIA CAPITALISM!
This morning light crude is heading for $61.
Gasoline at 1.78 up 8 cents.
At the gas pump? Headed for $3.00? Some places would like to see the pump price rolled back to $3.00.
I won't mention Peak Oil except to point out that it should be better named Peak Easy Oil. The easy oil to produce, the oil easy and cheap to produce is already being produced about as fast as possible. The rest of the oil, which will never run out for various reasons, will continue to cost more and more to produce as it gets less easy.
Gasoline 1.79, and copper moving up a little, too.
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