The first signs are emerging that Americans are finally ready to do something about their addiction to oil coupled with their staunch refusal to allow expansion of production. Believe it or not, America reached its peak oil production in 1970/71 at about 3.5 billion bbl’s per year. Aside from a minor rebound in the late 80’s when Alaskan production commenced, it’s been downhill ever since. Today we produce around 44% less oil than we did in 1971 yet our consumption has continued to increase requiring us to import more and more oil to the point where we now only produce around 25% of what we consume.
Two factors played into this current economic train wreck. First was an unrealistic concern for the environmental impact on additional exploration and the second was an arrogant blindness that made American’s think that cheap oil and gas was their birthright. So government put the brakes on increasing production while Americans kept producing gas guzzling cars all the while turning a blind eye on what was happening on the global scene as we funded an economic explosion in China and India thereby increasing their consumption from the global oil teat. Oh, and by the way, compared to what is possible, 30mpg is gas guzzling.
Our commitment to conspicuous consumption continued as gas prices passed through the $1 mark and held steadfast as they passed through $2 as well. It was the rapid move of oil prices eclipsing $100 and continuing past $130 pushing gasoline prices to $4 a gallon in some locals that shook Americans out of their complacency and caused the long overdue shift in attitude.
The first signs were subtle, a reduction in gas consumption on the Memorial Day Weekend as people changed their driving habits. Drivers are being far more conservative with the gas pedal as if all of a sudden they realized the gas pedal and the cash register are directly connected.
Then there is the $10 million Automotive X PRIZE, launched in March by the X PRIZE Foundation and Progressive Insurance challenging the brightest and best America has to offer to come up with marketable designs for high mileage or petroleum free cars that are capable of being mass produced.
However, it’s the latest sign that tells us that a complete paradigm shift is underway. Yesterday GM announced it is sidelining production of their SUV’s and focusing on ramping up production on the Volt, the plug-in lithium-ion hybrid car capable of delivering around 150 mpg in normal driving.
According to GM, they expect to build 10,000 Volts and have them in showrooms in 2010 and plan mass production going forward. We predict these cars will be selling at extreme premiums and will signal the beginning of the end of pure gasoline powered vehicles.
As arrogant and ignorant as American’s can be at times, as evidenced by our attitudes towards oil consumption for the past 30 years, we are also amazingly resourceful and determined when we set our mind to it. The Russians really embarrassed us and pissed America off in 1957 when they launched Sputnik and claimed the distinction of being the first in space. President Kennedy challenged Americans to reach for the moon and in 1969 we landed on it before the Russians even had a chance to get their moon rocket into space.
American’s are not only capable of eliminating our dependence on foreign oil, they can, if sufficiently motivated, eliminate or reduce our consumption of oil to such a level that we can begin exporting it.
A change is in the air and it appears that Americans have gotten tired enough of being bullied around by the OPEC countries and have decided to end it once and for all time. Watch for an increased emphasis and enthusiasm regarding products which relate directly or indirectly towards this effort. This is a sector that is going to be in strong favor for the next decade.
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