Friday, April 09, 2004
The price of oil
As this article notes, the reason the price of oil has gone up is NOT because America is topping up its strategic reserves, but because China's fast growing economy is now the second-biggest importer of oil. Of course, that implies that oil-using products are in high demand, such as cars, as American car companies are noting (happily) on their balance sheets.
I'm not overly worried about the price of oil, however. Always remember that prices are a signal to markets. The last time the price of oil went up, new fields in the North Sea opened up to make up for demand, and fields in Texas suddenly became economical again. Of more interest to me, though, is a post-oil future. Hydrogen, and fuel cells, will only be a credible option if the price of oil starts to go up. Of course, that won't help the millions of Americans barreling down the roads in the civilian equivalent of Sherman tanks, but it DOES start to push us towards reducing our dependence on oil, something Congress didn't have the courage to try in the aftermath of September 11th.
We don't want it to go TOO high, to be sure, but never underestimate human ingenuity. As prices rise, we start to find ways to use oil more efficiently. Higher prices over the medium term will result in even more efficiencies.
As this article notes, the reason the price of oil has gone up is NOT because America is topping up its strategic reserves, but because China's fast growing economy is now the second-biggest importer of oil. Of course, that implies that oil-using products are in high demand, such as cars, as American car companies are noting (happily) on their balance sheets.
I'm not overly worried about the price of oil, however. Always remember that prices are a signal to markets. The last time the price of oil went up, new fields in the North Sea opened up to make up for demand, and fields in Texas suddenly became economical again. Of more interest to me, though, is a post-oil future. Hydrogen, and fuel cells, will only be a credible option if the price of oil starts to go up. Of course, that won't help the millions of Americans barreling down the roads in the civilian equivalent of Sherman tanks, but it DOES start to push us towards reducing our dependence on oil, something Congress didn't have the courage to try in the aftermath of September 11th.
We don't want it to go TOO high, to be sure, but never underestimate human ingenuity. As prices rise, we start to find ways to use oil more efficiently. Higher prices over the medium term will result in even more efficiencies.
