The Royal Canadian Moped Posse

GTA 50cc

Monday, January 16, 2006

Oil price hike blessing in disguise Yes? No?

The only short-term hope of slowing down the rise in global temperature and meeting the goals of the Kyoto Protocol is a steep drop in the use of fossil fuel, and the only thing that is going to make that happen is a steep rise in oil prices.
Some time this week or next, oil is likely to reach $70 U.S. a barrel for the first time this 2006. The price is up by a third since the end of June, and U.S. prices have set record peaks in all but one of the past 15 trading sessions...Back in August the price peaked at around the $ 70 USD mark...
Thanks mainly to the rapid economic growth of China and India there is now a market for every barrel of oil that the producers can pump. Future demand is likely to grow faster than future supply for exactly the same reason.
Most of the growth in the global economy used to happen in the developed countries, whose economies typically grow at 2 or 3 per cent per year. Last year almost half the growth happened in developing nations.
China alone added as much demand as the United States, and India added as much as continental Europe. Those economies are growing at 7 or 8 per cent annually, and there is no way that oil production can be expanded fast enough to keep up. As a result, oil prices will fluctuate much more wildly than before.
If Iraqi production is disrupted by the resistance in southern Iraq, the Deutsche Bank warned recently, "It is not unthinkable that a second disruption(loss of some exports from Russia, for example) would push the prices towards $100... The price of oil may never actually fall back too far again, and even if it does, the long term trend is up.
Why is this a good thing? Because of global warming, which is coming fatera nd harder than even the pessimists.
Some of the changes we are observing now are very worrisome. It was assumed, for example, that the rise in temperature would be partly cancelled out by a higher rate of evaporation from the oceans that would proc=duce more cloud cover. Instead the higher temperatures are burning off the clouds.
Other recent research suggests the higher level of carbon dioxide in the atmosphereis stimulating the bacteria that live in peat bogs and greatly increasing the speed with shicc they dissolve th peat. The peat is almost pure carbon and when it dissolves it turns into-Carbon dioxide.
If that turns out to be a runaway feedback loop, we are in serious trouble, for the peat bogs of the northern hemisphere contain the equivalent of 70 years' worth of global industrial emissions of carbon dioxide.
New calculations suggest we may be facing a global temperature rise over the next century not of 5.8 degrees C, but as much as 10 to 12 degrees Celsius...
The Kyoto Accord is a good template for the global regulation of greenhouse gases, but the actual cuts on carbon dioxide production that is envisages do not begin to address the problem. The only short term hope of slowing the rise in temperature is a steep drop in the use of oil and gas...Alternative energy sources take a long time to develop, but energy conservation works relatively quickly: This slowing of the rise in temperuture will only happen if the oil prices go up and stay up, and Canadians finally are persuaded to change their gas-guzzling ways. ..

4 Comments:

  • At 1/17/2006 7:09 AM, Blogger john said…

    Get out and get those oil stocks or mutual funds that hold only energy.

     
  • At 1/17/2006 8:11 PM, Blogger freddie said…

    That's a good idea!

     
  • At 1/18/2006 10:53 AM, Anonymous wordboy2 said…

    yep. A friend at an oil and gas trust told me that when oil was at $16; I finally bought at $24 three years ago. It has been a great investment: paid for my son's university education, as well as all the higher natural gas, gasoline and electricity bills. With any luck, it'll help bridge my wife and I to retirement.

     
  • At 1/18/2006 1:38 PM, Blogger motormatic said…

    hey that's a good investment!

     

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