More on energy

I noted at the end of my last blog entry the announcement of the discovery of new oil in the Gulf of Mexico by Chevron and two other companies. An interesting analysis by Jim Cramer of TheStreet.com caught my eye. The following is an excerpt:

It's not an easy time to wait for news of big finds. For the longest time, the national oil companies didn't want oil so high that we would pursue alternatives to oil. That's changed now. Iran and Venezuela seem to want so much to see the West hobbled that they're ignoring the long-term view. And the Saudis are running out of oil.

The sense from most of the dreamers out there is that alternative energy is the ticket. The sense from the hardliners is that dirty coal is the answer.

The real answer, at least for the next decade, is that we need to find more oil.

That's why this Devon-Chevron find matters so much. It's what we will be hearing about much more in the future, and more of these finds will keep oil from going to $100, where it would be headed otherwise.


When I started reading this article, I expected to disagree with the contents. Then I realized that there is much commonality in our viewpoints. And Mr. Cramer writes succinctly. The first paragraph alludes to the following facts: 1) as long as petroleum is cheap there is little incentive to pursue alternatives, 2) we import much of our oil from countries that are not very friendly with us, and 3) oil resources are finite.

In the second paragraph, I would definitely classify myself as a dreamer instead of a hardliner. Then there is mutual agreement that oil is a short-term solution, not long-term. And without continual new discoveries oil will go to $100, then ...

Mr. Cramer is an investments advisor, and investors are concerned with turning a profit. In order to attract investors, companies are more focused on immediate returns than on the long term. I contend that we need an energy policy that addresses the inevitable end of easily accessed (and cheap) oil. The Gulf discovery is far offshore (175 miles), in very deep water (more than 7,000 feet), and is 30,000 feet below the gulf’s surface. This oil will not be cheap to produce.

Which brings up the point that I myself adhered to at one time: that the problem will take care of itself since as oil becomes more expensive alternative energy resources will become more competitive. My misgivings with this do-nothing-now solution are that we are setting ourselves up for a hard landing as demand continues to increase as supplies dwindle, we may be forced in desperation to accept ill-advised energy paths such as synthetic oil from “dirty coal”. it does not address global warming, and encourages “business as usual” instead of increasing public awareness of our energy addiction.

We need an U.S. energy policy. We need to change the direction of a very large ship.

In my next blog entry I plan to discuss sustainable solutions.