14 August 2008

Tipping point in peak oil crisis

By Jim Pinto

The depletion of the world’s petroleum resources was first forecast in the 1950s by Dr. M. King Hubbert. The point of maximum production (known as the Hubbert Peak) coincides with the midpoint of depletion—when half of all resources have been used. It is generally accepted U.S. oil reserves passed the Hubbert peak in the 1970s.

Ignoring the warnings, America and the world continues to gorge itself on oil, turning isolated strips of desert into crudely conspicuous concentrations of egregious opulence. Oilman T. Boone Pickens calls this the largest transfer of wealth in human history—about $700 billion a year, four times the cost of the Iraqi war.

Those who forecast oil at $100 a barrel were ignored as pessimists, until it happened. Then the speculators got involved, pushing it to almost $150 a barrel. Now it has backed down to about $120, and the pain is forgotten, until it inevitably jumps again. Expect $200-a-barrel or more within the next year, and then sighs of relief when it falls to $180. Will we never learn?

In Europe and most parts of the world, gasoline has been selling at $7-8 a gallon, but it had to top $4 in the U.S. before Americans took notice. Suddenly, the media and the financial markets understood the notion of peak oil.

In his new video and nationwide TV advertising, Pickens explains the problem and provides a rational explanation how our oil dependency can indeed be eliminated, or at least significantly reduced. Watch the video at http://www.youtube.com/watch?v=R2bOug1d20c.

Here is the geopolitical conundrum that grips the U.S: We are now borrowing money from China to buy oil from the Middle East to consume in ways that are destroying the planet.

Al Gore made a speech that laid it on the line for American spirit and enterprise. He calls for America to embark upon a moon-shot style program to switch to clean, cheap, and renewable sources for 100% of the nation’s electricity within 10 years.

Of course, there was the predictable cacophony of nay-sayers—America could not possibly transform itself so quickly. Al Gore points out America responded to President John F. Kennedy’s challenge in 1961 to put a man on the moon in less than a decade. America can meet the challenge.

Growth seems to be fizzling out in conventional industrial markets. Industrial Automation companies, large and small, can join the drive for alternate energy to generate new growth and success. There are several pockets of forecasted burgeoning growth. Get involved.

Related links:

• Watch the T. Boone Pickens TV commercial:
  http://www.youtube.com/watch?v=R2bOug1d20c
• The Tipping Point in the Peak Oil Debate:
  http://www.energyandcapital.com/articles/peak-oil-speculation/701
• American Energy Independence
  http://www.americanenergyindependence.com/
• Al Gore's 10-Year Plan to Solve the Energy & Climate Crisis
  http://www.thedailygreen.com/environmental-news/latest/gore-speech-47071701

Behind the byline

Jim Pinto is an industry analyst and founder of Action Instruments. You can e-mail him at jim@jimpinto.com or view his writings at www.JimPinto.com. Read the Table of Contents of his book, Pinto’s Points, at www.jimpinto.com/writings/points.html.