http://online.wsj.com/article/SB121253600160243157.html?mod=todays_columnistsRecently, there have been a spate of articles, of which this one is representative, which argue that the current high price of crude oil is reflective more of a speculative bubble or conditions of temporarily high consumption, and that the price will diminish in the near future.
I do not wish to speculate about the near future, but I doubt that the price of oil (and by implication, gasoline, plastic, and the other derivative products of oil) will continue to rise much higher. If it surpasses and remains above $140 per barrel for long, many solar powered electric alternatives will become price-competitive. If it continues to rise past there (perhaps propelled by a speculative bubble), more exotic technology, like the glitch-prone wave power technology and its ilk will begin to come on the table.
Now, oil prices do not have to remain high for a transition towards these technologies to take place. Quite aside from any entirely premature "peak oil" speculation, oil companies (with the exception of SaudiARAMCO and Exxon) are investing heavily in renewable energy sources and alternative technologies - research that is funded by oil profits and will be implemented by hard headed and experienced energy companies, rather than some bureaucrat or hippie. They do so not out of concern for the environment, nor out of sense of obligation to the crackpots that have been heaping scorn on them for providing the energy they use to broadcast their messages of ignorance and hate, but rather out of the fundamental profit motive: there is a genuine opportunity to make money by providing energy, in whatever form, and if green energy is or at some time in the future will be cost competitive with the older products, then energy companies want a cut of that action. They, unlike all "dreamer" organizations, have the infrastructure and the institutional know how to implement such technologies when they become available.
Only they have such assets.
In the coming years, there should be a
natural transition towards more renewable energy sources, powered not by environmentalists but by market forces. We will see it in the
oil market, yes, but also in the electricity market, which is not so heavily reliant on oil as many believe.
In the meantime, we could encourage the government to stop
meddling in the gasoline market, and allow the
natural transition to take place. Rather than being a jarring process, this can be a steady and largely painless transition - if the government would allow us to drill for oil in our own country and sooth the demand for oil.