> Counterpunch March 13, 2012 > A Tough-Oil World > Why High Gas Prices Are Here to Stay > by MICHAEL T. KLARE > > Oil prices are now higher than they have ever been — except for a > few frenzied moments before the global economic meltdown of 2008. > Many immediate factors are contributing to this surge, including > Iran’s threats to block oil shipping in the Persian Gulf, fears of > a new Middle Eastern war, and turmoil in energy-rich Nigeria. Some > of these pressures could ease in the months ahead, providing > temporary relief at the gas pump. But the principal cause of > higher prices — a fundamental shift in the structure of the oil > industry — cannot be reversed, and so oil prices are destined to > remain high for a long time to come.
In the near future, it's quite likely that oil and gasoline will become cheaper in purely market terms (i.e., prices). On the demand side, high prices encourage oil's replacement with other energy sources and greater efficiency in the use of petroleum products -- and also slower GDP growth. On the supply side, high prices also encourage exploration, as Klare emphasizes, along with greater efficiency in the extraction of existing oil reserves. All of these encourage falling oil and gasoline prices, as do the end of various temporary (or "conjunctural") forces like sabotage in Nigeria. On the other hand, Klare's argument is that the environmental (or external) costs of petroleum are rising is strong. Not only does the extraction of non-"easy" oil destroy the environment even more than the old "easy" oil fields did, but the use of the product encourages global warming and other environmental disasters (cf. those tar sands). The true or social cost (price + environmental cost) will likely rise, since the long-run trend of rising environmental impact will continue and likely intensify. In terms of true costs, it seems to me, Klare's argument is totally valid. Some say that we should hope for higher oil and gas prices in order to discourage the use of petrochemicals due to the disastrous effect on the environment. The problem with this is that high prices just reward the oil companies with large natural-resource rents and encourages them to invade more parts of the world to suck out the oil. Instead what's needed is active governmental efforts to reduce the demand for petroleum and its by-products. It's not likely to happen soon, so we're likely to see the steady rise of the true cost of oil, even if market prices fall. -- Jim Devine / "In science one tries to tell people, in such a way as to be understood by everyone, something that no one ever knew before. But in poetry, it's the exact opposite." -- Paul Dirac _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
