Gasoline prices are on the rise again, now well above $1.33/l here and now over the dreaded $4/gallon mark down south. This is prompting all the traditional ire and rage, and it’s happened so many times in the last decade that it’s now a familiar tune. Gas companies are “gouging us” by raising prices well above actual oil prices, and keeping them high long after oil prices drop. The solution posed, of course, is to have politicians legislate the price down by going after oil companies, gas stations and speculators. Obama is now threatening to cut billions in subsidies from oil companies, to prove (as he ramps up his next campaign) that he’s doing something. but will it help?

The first question we need to ask is clear: are oil prices rising? Yes. The price of a barrel of oil now is around five times what it was a decade ago, and now twice what it was after the Crash of 2008. Is speculation a part of this? Definitely – it always is in markets. But it doesn’t tell the whole story. We’re running out, and it’s really beginning to show. Are we approaching “peak oil”? At this point, we may already have passed it.

Peak oil doesn’t mean that there’s an unmovable line on a graph that oil production must follow. It does mean, though, that maintaining this decade’s level of production (highest ever, but unable to increase much) is going to get harder and harder: ie: more expensive and more carbon intensive. It also means that the longer we stretch it out, the steeper the decline will be when we stop, since the total amount of oil left can only drop.

There is enormous political pressure, both from the public and from the private sector to keep oil prices artificially low, since oil is used in nearly everything we do and price increases spread fast. Demand is rising much faster than supply and the only way to shield ourselves from the massive price increase this is generating is to pump oil out as fast as possible. We’re relying on dictatorships like Saudi Arabia, oil sands/shale, offshore drilling, warzone oil and many other options, but all are showing many of their own problems. In the long run, it really only amounts to working as hard as possible and accepting the highest costs in an effort to get the lowest price possible. Not a wise business policy, especially when many nations rely on oil reserves to feed their populations.

Some people are now waking up to this fact. A recent paper from the NYU Law School on Integrity has stated that Government calculations on the costs/benefits are fundamentally skewed. By imposing a “now or never” outlook, they never explored the option of simply waiting. Cleaner and cheaper technologies will inevitably exist in the future, and we’ll likely be able to sell at higher prices, too. And while it’s written about America, exactly the same could be said about Saudi Arabia or anywhere else.

If we hadn’t been highly subsidizing the price of oil until now, it would already be much higher. But what would that mean? We’d already be a lot less reliant on it. We’d already be using less (which paradoxically, might mean we’d be paying less at the pump now). We’d have more bikes and solar panels, and probably be eating much healthier food. The longer we refuse to admit that oil is actually running out, the rougher that eventual transition will be. As we can now see from the volatile world economy, we’re not saving ourselves any money by going on a mad dash for the last of endangered resources, and unfortunately many of the first casualties of the 2008 crash were the same green energy programs that might have helped us deal with this.

It’s easy to pretend that gasoline and oil prices are high because corporations are greedy and corrupt. It’s absolutely true. But it’s not the whole story. We, as people, can’t fix this problem by getting angry and demanding that our leaders “fix” it. Politicians and corporations aren’t going to take us “off the grid” because there’s nothing in it for them. But every time the price of gas goes up, there’s a little less in it for us to play along.

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