DancesWithCamels

They say that the first step towards recovery from an addiction is to admit that you have a problem. I think that oil consumers have reached that point. I came to this realization today upon reading an article in the Wall Street Journal which likened the decade’s spike in oil to the DotCom bubble of the late 90’s. Another personal indicator for me is the sheer amount of conversations I have been involved in recently that revolve around the astronomic price of oil, and whose points are the material that comprise this piece. By the way, if you are looking for an academic argument, do not read further. The fuel I’m running on is intuition.

Oil has dropped $10 dollars off its high of $135 a barrel last week. I perceive this to be pushback against the atmosphere of urgency that has dominated the issue of fuel prices in the past few weeks. It is a signal that much of the run up in prices is based on alarmist speculation and hype about dwindling oil reserves and paranoia over extended consumption. Indeed, this mentality is what has driven commodity speculators to invest in oil futures.

Admittedly, the climb of oil has been fueled by the developing behemoths of China and India, countries that justifiably have to think about their burgeoning economies rather than their smog issues, but once they have glutted themselves on subsidized oil they will realize how much more they can advance with cleaner and cheaper fuels. Similarly, Russia, whose economy has skyrocketed because of the value of their oil resources, will fall back to earth once the oil market does.

Signs that the binge has gone too far are omnipresent and the latest spike has at last pushed us over the edge. Europe is striking. Fishermen blockade ports in France, truck drivers in the UK have turned off their lorries and are blocking traffic, and in Germany dairy farmers are watering crops with milk. All of this rather than work on the radically reduced profit margins which have resulted from their fuel expenses. Now of course they aren’t advocating a military take over of Arabian oil fields (at least publicly) but they are asking that their governments reduce the petrol taxes and apply pressure on oil producers to increase production. They are also calling for a raise in regulated consumer prices to cover their costs. And so costs will likely rise for European commodities just as food prices are rising around the rest of the world.

I think consumers will not take this so lightly. Westerners have reached a threshold in which continued dependency on oil is simply unacceptable. For the human race, historically, there is a point where we seek an alternative. It takes some time, but it happens. I don’t think anyone believes we’ll be on oil 500 years from now. No doubt we have been looking at other options for years already, what with hybrid cars, wind turbines and safe nuclear energy appearing consistently in environmental dialogue. But whereas the efficiency of these alternative fuels has been problematic the public has muted the urgency of their development – no longer. The masses of poor and middle class workers in the United States whose cost of commuting has more than tripled since 2001 will simply not accept such excuses any longer. We have reached a moment in history when politicians will no longer be able to hear the sultry financial whispers of “big oil interests” over the cries of their furious constituents.

These cries are, even as I write this, bringing leaders to the realization that we have been held under the sway of the wise and manipulative drug dealers that are the oil producing nations. They are beginning to review a history of seeming appeasement to OPEC members that have now overplayed their hand and will now seek to remove the leverage shaped like an oil rig that has been used against them. Just last month the Saudi’s reneged on a deal with the US government, brokered in person buy Dick Cheney, to increase production and get the price of a barrel down to $85. America finally called in a substantial favor with Saudi Arabia at a moment of need and it won’t take rejection so lightly this time. In the past it seemed that the US was in control as its alliances assured it cheap gas, but we weren’t so smart, not realizing that we were just getting hooked in and dependent.

Evidence of the expansive wealth that has flooded into the coffers of oil sheikhs has been apparent for decades. Monster yachts, ostentatious mansions and emerald cities sprouting in the desert were around when oil was just $25 a barrel. Now, just eights years later, oil consumers will not be able to stomach the buying power afforded to these producers at the expense of their economy and the scary prospect of what a $125 a barrel can purchase. We can now palpably envision the pipeline leading away from our banks, exiting the country and crossing oceans. This is nothing secret or abstract. The Sheikh’s over abundance of capital is being used to buy up substantial holdings in the West, looking to diversify their portfolios with multi-billion dollar companies.

The expensive prospect of developing alternative fuel sources is no longer a deterrent since oil prices are so high we now have nothing to lose by aggressively pursuing them. We are learning that bio-diesel isn’t the best solution for the environment but this won’t stop the tide of change. In fact, just as JFK announced when he took office that within a decade we would put a man on the Moon we will now see world leaders making the same bold statements to move past fossil fuels. Just as in a time of urgency the Manhattan project yielded the most awesome power known to man, all it takes is the unquenchable will to achieve something and humans will do it.

Though I may be a wide-eyed idealist at this moment I don’t in any way believe oil will be obsolete and devoid of value. There will simply be an alternative to its use. Most people don’t realize all of the areas in which oil is necessary. So if we no longer use it to fuel our cars we will still need it to make plastics, for example. But once this advancement occurs, fears of using up the supply will vanish and prices will drop, stabilizing to a point where producers will have to drill more out of the ground in order to keep us interested. It will become just another run-of-the-mill commodity. Just watch.

The past few months have been momentous as the world has reached its epiphany, and although it may not be explicitly stated, I see it by reading between the lines of daily news coverage. It is time to get off this black heroine that is simply not environmentally or politically viable for a globalizing world and we are ready to admit we have an addiction. The first step is being taken.