Do you remember when fear of “peak oil” was all the rage? We were told that as the world’s supply of oil dwindled, nations would wage war for the last drops.
Or, if that doesn’t ring a bell, remember threats of gasoline costing $10 per gallon? When gas rose rapidly to $4 in 2008 and went back to that price a few years ago, we were all wondering when gas would crack $5 and then $6 and so on. Priuses, Insights, Volts, Leafs, Teslas – car manufacturers couldn’t churn out the electrics and hybrids fast enough.
Fast forward a few years. Gas costs less than $2. People are enjoying reduced heating bills. And it’s pretty easy to buy a hybrid. While the last 10 years has brought mostly angst regarding the oil market, we’re seeing almost the opposite now as elation takes over the consumer class. Heating oil in Maine is at its lowest since 2004, when the governor’s energy office started keeping track of fuel prices. While people are still buying gas-sipping cars, many more are buying bigger pickup trucks and luxury automobiles. Times are definitely heady for the driving public.
But what’s good for the goose isn’t always good for the gander, as we learned recently when stocks sank after oil dipped below $30 per barrel. OPEC keeps pumping at high rates despite lower demand in China and elsewhere as a global economic slowdown takes hold. The same market forces that bring lower pump prices have also brought American fracking companies, which were drill-baby-drilling not too long ago, to their knees. A CNN story last week cited government reports that 81 oil and oilfield service companies filed for bankruptcy in 2015. Big banks, which provided loans to those companies, are on the hook for losses. That same CNN story said 130,000 American energy-sector jobs were lost last year.
Maine may be far from the shale oil fields, but we’re not immune to this market shift. We have many retirees and those close to retiring. While younger people needn’t be nervous about this latest stock and commodity collapse, older people are certainly worried about their portfolios and will probably spend their money less freely as a result, harming the local economy if things continue this way.
All this upheaval in the market has us thinking about how to best handle this new normal, to steal a phrase from President Obama’s financial meltdown-era phrase book. Rather than buying larger cars and turning up the heat and feeling giddy about saving money at the pump, we’d urge everyone to remember that this, too, shall pass. While experts say it may take a while, oil will eventually return to previous levels, so now is not the time to become complacent. Now is the time to double down and prepare personally for the next spike and, in a larger sense, fulfill that elusive goal of American energy independence.
Watching geopolitical machinations, we can see that Saudi Arabia and other OPEC nations are playing hardball, in effect keeping their taps on full blast in an effort to push prices low enough to force upstart American oil companies out of the game. We usually think of Saudi as a partner in our need for oil, but this latest episode shows they are willing to go to great lengths to protect the sole driver of their economy.
So if oil isn’t the answer, what is? Solar farms, on an industrial and residential scale, as well as hybrid technology, hydrogen fuel cells, nuclear, biothermal, wind – these are the answers to our long-term energy needs, as has been the mantra since the oil shock in 2008 and prior. We’re not sure OPEC will allow us to detox from their oil opiate, but for our own sake, it’s the direction we need to move.
Sure, we’re enjoying cheap oil now, but history always repeats itself. Oil impacts our wallets at the pump but also our tax bills, since schools, towns and county budgets are dependent on fuels. If we can move away from oil, we can leave the Middle East in our dust, along with their political and religious turmoil, which is only growing more violent and sectarian. But as long as we’re dependent on their oil, we’ll never free ourselves from this vicious cycle. It’d be good to remember this as the market sings a siren’s song to us in these delirious days of cheap oil.
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