Cheap Oil Out for The Count, Maybe Not?

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Super Investing

The price per gallon for gas here in the U.S. is expected to hit the roof this month, mostly because retailers have begun cashing in on one of Americas biggest holiday travel periods. The U. S. Department of Energy states the average price of gasoline is $3.84 per gallon, up 98 cents from last year at this time and 5 cents from just last week.

The soaring prices make this the highest price paid for gas in April in over 20 years. Many firms are anxious as they look ahead to the peak U.S. vacation season, Memorial Day on May 30. The global energy sector needs to ramp up production to meet the insatiable demand of the world’s economies. The IEA warns consumers world-wide that we have come to end of cheap energy.

The International Energy Agency on www.upi.com, warned that” it won’t be easy to reverse the rise in energy prices because it’s getting harder to access and exploit conventional resources. ‘The age of cheap energy is over,’ said IEA Executive Director Nobuo Tanaka in a statement from Luxembourg.” “IEA analysts said the world needs another 50 million barrels of oil from new fields by 2035 in order to meet expected demand. Crude oil production from existing fields, meanwhile, is expected to decline from the 68-million-barrel-per-day mark in 2009 to just 16 million bpd by 2035.”

The predominant world belief seems to be that we have reached the end of the line as far as exploiting cheap energy, but here in the U.S. there is a different school of thought.

The United States imports approximately 3.67 billion barrels of oil every year from 42 different countries. We are the top consumer of crude oil in the world. An AP.com article points out there is hope in the future because a new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude.

Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day more than the entire Gulf of Mexico produces now.

According to globalpetroleumclub.com, America’s oil shale reserves are enormous, totaling at least 1.5 trillion barrels of oil. That’s five times the reserves of Saudi Arabia! And yet, no one has been able to produce commercial quantities of oil from these gigantic deposits. We have all this oil and it is sitting right where Mother Nature placed it, buried under the sprawling county sides of Colorado and Wyoming. The problem is that there are huge obstacles in the way we currently extract oil from shale. If it were easy I guess we would already be doing it. “Oil shale is the fuel of the future, and always will be,” goes a Western Colorado saying.

Another study says, drilling on Alaska’s Outer Continental Shelf (OCS) could make Alaska the eighth largest oil resource province in the world ahead of Nigeria, Libya, Russia and Norway.

The report by the consulting firm Northern Economics and the University of Alaska-Anchorage’s Institute of Social and Economic Research says that “developing Alaska’s OCS could produce almost 10 billion barrels of oil and 15 trillion cubic feet of natural gas, create around 55,000 new jobs and produce $145 billion in new payroll nationally, generating a total of $193 billion in government revenue through the year 2057.”

A big problem for oil producers drilling in a post ‘gulf oil spill’ world is the tide of bad public sentiment towards them. According to the Washingtonpost.com, “BP employees could be found criminally negligent for the 206 million gallons of oil the U.S. government says gushed from the company’s blown-out well and for the 11 men who died when the Deep-water Horizon rig it was leasing exploded. BP has estimated that the spill will cost the company at least $40.9 billion but is hoping to force some of its partners on the doomed rig to assume some of those costs.”

“There is also lasting damage in the Gulf, including empty hotels, out-of-work oystermen and fears of a badly disrupted underwater ecosystem. And some of those worst hit by the spill scoff at BP’s oft-repeated promises to make people whole again. “I don’t know of one person who has come to me and said, ‘I’ve been made whole. I feel good.’ Everything is completely negative from everybody,” said Louisiana fishing guide Ron Price.” The bad feeling toward the oil industry is understandable nut it cannot and will not last because like it or not the world needs oil to feed the voracious appetites of their growing economies. In the meantime, it seems that the prices of oil will continue to rise, and the only hope we have right now of saving money is turning to the many green alternatives that are coming out of this oil crisis.

Russell W. Dickson, lives in upstate NY, and is a Freelance journalist. He has written for both print and online news/opinion pages.Russell holds a B.A. in English, minor Journalism from The University at Albany, Albany, NY. His writing experience spans more than a decade and his work has graced the pages of newspapers, magazines, online news orgs, and political websites in both the U.S. and abroad.