Oil - it's not just for the rich

People who dismiss the concept of Peak Oil rarely argue that we have unlimited supplies of oil; more commonly, they argue that we'll develop viable alternatives before we run out of oil. The thinking is, we'll discover more oil, and we'll develop new technologies, and we'll refine existing technologies, and everything will be fine. I like that thinking. The truth is, we have the technology to create more efficient cars (although I was shocked, buying a car last year, to discover that the most fuel-efficient non-hybrids were no more efficient than the old clunker I drove in high school), and we ARE creating more efficient appliances. You can buy a 42" LCD TV that uses no more energy than a bright lightbulb, and it won't even be the most energy-efficient large TV on the market. I like the idea that Peak Oil doomsdayers are crackpots, that life as we know it will continue, albeit a little differently, a little better.

I really, really want to believe that the dollar is stable (we've saved a few of them, it would be nice if they're worth something). I want to believe that everything is rosy. And I keep coming back to a handful of scenarios where oil is only affordable for the rich. 1) Peak oil production occurs as demand continues to grow - rising demand, reduced supply = higher prices; 2) Competing demand from China and India (both with more people, less debt, and a growing share of world manufacturing AND professional employment, while the U.S. GDP is 60% services) for a limited resource drives up prices without there having to be a reduction in supply; 3) A declining dollar, coupled with our high debt (and potentially high interest rates) makes oil increasingly expensive for us; 4) War in the Middle East results in large stores of oil burning up (like after the first U.S./Iraq war), reducing supply; 5) Continued high demand in the face of rising prices convinces the Middle East that they can continue to raise prices without losing profits; 6) War in the Middle East disrupts demand for more than just a few days (it's a politically instable region, with a very long history of skirmishes between nations even before the Israeli infidels arrived); 7) High oil taxes, designed to force us to be more efficient; 8) Economic warfare - Iran gets tired of our complaints about their nuclear program and says "fine, we won't sell you more oil", or any other nation in the Middle East withholds oil or raises prices to hit us where it hurts, our pocketbooks; 9) Terrorists target our oil supply, terrifying Middle Eastern countries into cutting off shipments.

Most people don't remember the lead up to the first Iraq war. It was a series of stories buried deep in the International news section. Some Middle Eastern dictator named Saddam Hussein started begging OPEC to raise prices; OPEC didn't agree. Hussein made numerous pleas without success. Then Hussein placed troops at the Kuwaiti border. I was in high school at the time, on this wierd combination of college-prep courses for the college bound, and an internship program for the non-college bound. I went to school for half a day, then went to work at my internship job. My class schedule went until before lunch some days, and after lunch other days, so my internship work schedule started after the latest class. After the internship job, I went to my real job, and worked until the store closed. Which meant I had a few days a week with a really long lunch break. Some days, I went to the mall, other days, I did homework, and most days I picked up lunch and a newspaper, and went to the park to eat and read. If I didn't get to read the paper on my lunch break, I read it during down time on my night job. I felt like the only high school student in the world who read the entire news section every single day. I also felt like the luckiest high school student in the world, having only a half day of school, a car, AND a job.

That happened to be the year that we went to war with Iraq. My night job was at a little country store with a grill, mini-market, and one gas pump. When Hussein massed troops at the border, I told my boss that he should get the gas tank topped off before prices rose. He didn't. I don't know, I was 17, maybe this kind of crap happened every year. To me, however, it was quite evident that Hussein was motivated, and he was going to get his price increases no matter what it took, even if it meant war. Gas prices took off, and everyone complained, and I didn't understand. I wasn't paying rent; I was paying teenage car insurance rates and saving up for college and I wasn't saving enough and I just saved less and kept buying gas. I didn't have a choice - my internship was 30 minutes away and I had committed for the full school year (and it paid more than minimum wage).

We think of Saddam Hussein as this terribly irrational dictator, and history already pegs him as having attacked Kuwait out of greed. The news stories at the time, however, told the story of a man who desperately needed more money, who couldn't find any other way to get it. Perhaps his reasons for needing more money were specious; like a teenager who desperately wants designer clothing, asks mom and dad for more money, and then steals when mom and dad won't pony up the cash. It doesn't matter though - a madman's perceived need for money is no less motivation to stir up trouble than a sane man's desperate attempt to feed his child. What I learned from Saddam Hussein was that OPEC is not a unified representative of all its members' needs and desires, and that gas prices in America are dependent on nearly inexplicable conditions far away and far from our control. The world doesn't have to run out of oil to cause price disruptions that can cripple our economy.