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Tag:Oil
Posted on: June 11, 2008 6:41 pm
 

Oil and our Economy

We all know that the cost of oil keeps going up and up.  I've seen numerious posts condemning the government for it's lack of action and inability to fix the problem.  I have a solution that I can guarantee just about nobody out there is going to like.  This solution to the problem entails more difficulties for the American people rather than less, however, ultimately this system is the only way that we can be assured of the long term economic survival of the country that we all know and love. 

In order for the crisis with oil prices to be resolved the prices need to continue to go up.  That's right I said up.  Now I understand that places more of a strain on everybody's wallets and really creates economic problems, but here's the thing.  Oil is a finite resource.  The reason that oil prices have gone up is not because of poor government policies, but rather it's an increase in the demand for oil namely from other countries such as India and China.  In order to lower the price of oil you need to either lower demand or increase supply.  Well India and China aren't going anywhere, and Americans are extremely reluctant to pull back on their oil consumption so that leaves increasing supply.  Yes we could drill new oil wells and destroy the environment and yes it could provide us with a short-term fix in oil prices, but what happens as developing countries continue to grow, we're going to be right back in the position we're in, Global warming will have increased to even higher levels, and we could be facing the brink of disaster.

Or we can let the oil prices go up.  This will eventually have positive effects, the first thing that will happen is that it will create a situation where market forces will force people to lower their consumption of gasoline.  This will create a huge demand for alternate forms of transportation.  Because there is a demand for these products, large corporations will step in to provide vehicles that run on alternative forms of energy.  You're skeptical I can see.  Well let me put it to you this way.  Do you think hybrid cars would have been developed if gas was a dollar a gallon?  The fact is they wouldn't be.  Not to mention the fact that now every car company produces hybrid cars and they are more affordable to drive.  Now Chevy is producing an electric car set to be released in 2010.  If that car is comercially successful, then there will be more companies producing electric cars and the result will eventually be a set of vehicles that run on no gas at all rather than gas that is only going to go up and cost more. 

Now politicians do need to work to subsidize alternative fuel power plants.  My hope is that these electric cars can be run on a combination of solar, hydroelectric, wind, and eventually Hydrogen Fusion.  The problem with this hope is that electric cars and alternative energy needs demand.  That demand can only be produced by higher oil prices.  Yes it will be hard.  Yes there will be suffering, but the end result will be a vibrant economy that is free from the shackles of oil and that has done our part to solve the crisis of Global Warming. 

(P.S.  anyone who doesn't buy into the global warming issue just watch An Inconvenient Truth, it is a frightening film)

 
 
 
 
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