The first reaction to gas prices over $2 a gallon is probably a four-letter word. The next reaction is likely a three-letter word: Why? Followed by: How long?
Q: Are we running out of oil?
A: Yes. But when?
Everyone agrees that crude oil – a fossil fuel – is a finite resource that will be exhausted some day. Estimates of the total amount of recoverable crude oil that was available vary from 1,800 billion to 2,200 billion barrels. But we’ve used up close to half of that, and global demand continues to surge.
Only a handful of major new oil fields has been found since 1970, when U.S. production peaked.
Some say the formula that predicted when American production would decline – known as Hubbert’s Peak – shows that the global oil peak is taking place this decade, and may have happened already. The most negative theorists believe that a worldwide crisis of war and famine will be triggered not when we run out of oil, but when demand outstrips supply in a few years.
The more optimistic oil-watchers believe petroleum won’t see its peak until closer to 2050. They argue that the naysayers are underestimating both the size of underground oil reserves as well as the rise of technology to better extract that.
Q: Will I ever pay less than $2 a gallon for gas again?
A: Quite possibly, although don’t bet the ranch on prices falling below $1.50.
Relief could come with a decision by the oil-producing states of OPEC to boost production when oil ministers meet next week in Beirut. Saudi Arabia, America’s key ally in the Middle East, wants OPEC to boost production by 2.5 million barrels a day, which would ease prices.
A lot of the 2004 price spike has been caused by the economic boom in China. Demand for energy in the world’s most populous nation surged by 13 percent in just the past six months, but no one expects that to continue.
Saudi experts are optimistic that oil prices will settle about 20 percent lower, which in turn might bring gasoline closer to $1.75 a gallon. But not everyone is so sure. “I think you’ll see $50 [a barrel] before you see $30 again,” oil legend T. Boone Pickens said recently. Currently, a barrel is about $40.
Q: Didn’t we really invade Iraq for its oil?
A: That’s a simple question – without a simple answer.
Anyone who expected the American invasion of Iraq to lower prices at the gas pump is sorely disappointed.
Iraq is now producing less oil than it did before the recent war, when it churned out 2.5 million barrels a day and – despite harsh economic sanctions – was America’s seventh-biggest oil importer. Blame the drop largely on sabotage and terror attacks.
But Iraq is also home to the world’s second-largest known pool of oil reserves, so it’s clear why the United States would want a Middle Eastern oasis of influence in Iraq.
Given the unstable situation in Saudi Arabia, an American role in Iraq provides a kind of back-up plan. Experts in geopolitics say that while the United States didn’t necessarily invade Iraq to grab its oil, some American policy-makers clearly did want the political hegemony that comes with control of such a vital resource.
Q: Doesn’t the U.S. have a huge pool of oil for emergencies down in Texas and Louisiana? Why not use it now, because $2 a gallon is a national emergency, right?
A: The Strategic Petroleum Reserve, stored in salt domes near the Gulf of Mexico, currently holds some 660 million gallons – close to its capacity.
The reserve was created after the 1973-74 oil crisis, and its been tapped a number of times, including right before the 2000 presidential election by President Clinton. President Bush says it should be saved for a real emergency, but Democratic foe John Kerry disagrees.
Q: Is there anything I can do to reduce how much gasoline I use?
A: Yes. You could drive less, or you could buy a hybrid – with both a gasoline engine and an electric motor. The Honda Civic and Toyota Prius hybrids get 40 miles to the gallon or more.
Later this year will bring the first hybrid SUV, a version of the Ford Escape. So far, some 30,000 people have signed up on the Internet to buy one.
