You read it here first! Not only will oil be under $20 a barrel, the momentum in the war on terror, if we haven’t won by then, will have shifted heavily in favor of the “Good Guys” primarily because Muslim extremists will be starved for funds and no longer able to prosecute the war as they have in the past. This will all come to pass by 2020.
Given today’s skyrocketing oil prices, I know it’s hard to imagine such a reversal but, before you call me crazy, hear me out. I think the reason this conclusion hasn’t been presented previously by more conventional pundits is because most of the so called experts are so distracted watching today’s markets and trying to figure out what will happen tomorrow by simply extending charts and graphs, they can’t imagine the possibilities of a paradigm shift that alters the end game. So, for the record, here’s how this will play out; here is how we will see $20 barrel of oil by 2020.
Phase 1 – America Wakes Up
Americans are going to say “enough” with the price of gasoline and heating oil about the same time as they wise up and finally realize that America is the primary funding source for both sides of the war on terror, our side through our military budget and the terrorists through the importation of OPEC oil. When the epiphany occurs, we will finally get serious about getting this petroleum monkey off our collective backs. Signs tell me this awakening is underway already. Once it starts, it won’t stop. Enlightenment is not reversible.
In the past, each time gas prices shot up to a new plateau, we screamed bloody murder then chose to accept the status quo rather than making wholesale changes in our driving habits or how we view new oil exploration. Eventually, we settled into old patterns until the next time gas prices shot up. This time is different. This time we’ve crossed the threshold of our indifference and finally, Americans are going to make the change.
If America is going to prevail as an economic and military superpower, we must commit ourselves to oil independence. This means committing ourselves fully to alternative energy, primarily when it comes to our motor vehicles. The time is right. Technologies have progressed to the point where we are now capable of producing a hybrid automobile that deliverers an average of 150 mpg. We’re beginning to see pure battery and fuel cell cars that will burn no gasoline and yet will provide suitable transportation for the majority of Americans. The time for change is here and, over the course of the next 12 years, we will see the alternative fueled vehicle industry explode as traditional gasoline powered vehicles become a relic of the past.
At the same time as we are embracing this shift in transportation technologies, American’s are also going to realize more vividly how directly the importation of OPEC oil is funding the Islamo-fascists and their campaign to destroy western civilization. Although bombs and bullets are a necessary, if unpleasant, component in winning the war on terror, they will not be enough.
In WWII we defeated the Nazis as much by cutting off their supplies as we did by killing them on the front lines. The difference is, with the Germans, the supply lines were factories, railroad tracks and bridges. The enemy’s supply line is an electronic transfer of funds from the source to a remote terror cell as often as the transportation of arms from supporting nations to insurgents in Iraq or Afghanistan. Either way, available capital is the primary resource that supports the enemy’s campaign.
The fact that non-combatant countries such as Syria and Iran are primarily responsible for providing the articles of war to terrorists in Iraq and Afghanistan, makes attacking the physical supply lines even more difficult. The way to win this war with a minimum loss American lives is to cut out the heart of the beast by eliminating its funding. The way to do that is to destroy OPEC’s economic machine by taking advantage of the simple law of supply and demand. Simply put, first reduce, then eliminate the demand for OPEC oil and the entire Islamo-fascist house of cards will begin to collapse.
Let’s also remember that WWII was won, in large part, because of the efforts of Americans at home. We dug deep and did our part to defeat Hitler. From Rosie the Riveter to tire and scrap drives, we all were in it together and when America joins in a common cause, nothing can defeat us. Likewise, when Americans wake up and catch on that everyone driving a car that delivers less than 30 mpg is a de facto contributor to America’s sworn enemy, the impetus to produce plug-in, fuel cell and hybrids producing 150 mpg or better will step to the forefront. By 2014, America will have a wide variety of desirable cars and trucks to choose from that use either no gas at all or deliver better than 150 mpg. You want to end the war on terror and bring our men home? Then don’t march or protest; instead, dump that V8 and get yourself a hybrid.
America is waking up, wising up and climbing on board the movement toward complete oil independence. Phase I is occurring as I write this. Phase II is destined to follow.
Phase II – America Gets Busy
The biggest impact on America’s oil consumption will be the shift from gas/diesel powered vehicles to hybrids and alternative energies such as fuel cell and lithium-ion plug-in cars. The average mileage of new cars being sold in 2007 was 26.4 mpg, finally eclipsing the previous high of 26.2 set in 1987. This simple statistic tells us more than anything else just how completely we have chosen to ignore the obvious signs that warned us of today’s “energy crisis.” With our awareness and, without the necessity of government regulations, consumers will demand and, the auto industry will deliver, vehicles delivering an average of well over 50 mpg by 2014. This will continue to increase steadily to beyond 70 mpg by 2020. Announcements by GM (NYSE: GM), Toyota (NYSE: TM) and Honda (NYSE: HMC) over the course of the past couple of weeks confirms this new direction.
Today, Americans consume over 8 million barrels of oil a day with their passenger vehicles. Instead of that becoming 12 million barrels per day by 2025, as some economists predict, our consumption of oil for passenger vehicles by 2020 will be under 4 million barrels and falling rapidly toward less than 2 million by 2025. The analysts, in their gloom and doom predictions, failed to consider technological advances and American resourcefulness. Simply put, they are wrong. As a sign of things to come, American consumption has already started to fall with March consumption falling by more than 3% from the previous March. April saw an even greater drop.
Still, cutting our oil consumption in passenger vehicles is only part of the equation. Even though oil is an inconsequential player in powering America’s electrical grid, we will need a significant shift in our attitude toward nuclear energy. Nuclear energy is one of the key components in getting America to petroleum independence. To finish the job, America is going to need a lot more electricity and the only fully deployed, ecologically rational source currently available is nuclear energy (no disrespect intended toward solar, geothermal or wind as they very much represent the future of this country’s electrical supply). Applications for the construction of new nuclear plants have already been submitted and many more will follow. This, combined with rapid advances in geothermal, wind and solar will free us from continuing as economic hostages to the OPEC countries.
Currently, more than 180 million barrels of oil are consumed as heating oil every year, primarily in residences in the Northeast. With abundant and affordable electricity being produced by nuclear power plants as well as the addition and improvement of wind, solar and geothermal energy, homeowners will convert from fuel oil to electric heat as a simple cost saving move. This will further reduce our dependence on oil by more than 500,000 barrels a day.
The aggressive deployment of nuclear power plants nationwide will also allow us to phase out America’s natural gas fired power plants. This, in turn, will allow us to redirect our natural gas resources toward replacing diesel fuel in buses and heavy trucks as well as passenger vehicles. The elimination of natural gas fired power plants will stabilize natural gas prices at advantageous levels compared to diesel fuel and, once again, this shift will be driven by economic forces rather than governmental mandates. Compressed Natural Gas (CNG) is already comparatively less expensive than gasoline or diesel. With it removed from the power grid, it will become even more attractive.
By 2020, nearly all of the city buses in America will be powered by CNG or biofuel products. Since diesel fuel powered vehicles currently represent about 20% of the total oil consumption in America, we will have reduced our consumption by about another 3 million barrels per day.
With our consumption reduced by more than 7 million barrels per day, our production deficit would be only 5 million barrels per day. Fortunately, this won’t represent the kind of problem it did just a year ago. Americans are becoming less tolerant of radical environmentalists who are singularly responsible for American oil production’s decline to 44% below its 1970/71 highs. Liberal Congresses, encouraged by vocal environmentalists halted exploration for more oil in the early 80′s. Obviously, they thought it was a good idea for us to just buy it from the Middle East. History shows us that was a really really stupid idea.
Expect to see this change over the next year, if not sooner. The Democratic ban on exploration in ANWR, signed into law by Bill Clinton, will be overturned under pressure from an enraged citizenry who will say in a very loud and collective voice, “screw the caribou, we want the oil!” (scientific studies have since shown the caribou actually couldn’t care less). ANWR will add 2 million barrels per day to our production leaving us with a very attainable objective through offshore drilling and foreign oil production ventures.
The ban on offshore drilling will also be lifted so, in addition to the Chinese and others who are currently drilling off our shoreline on OUR continental shelf, we will be out there as well. By allowing the oil companies to invest their “obscene” profits in increasing production, the remainder of our deficit will have disappeared by 2018 and America will have become either petroleum neutral to the global market or, perhaps, even become an exporter of oil, at least while the high prices hold.
The elimination of our 12 million barrels a day purchases off the world market will have a huge impact on the price of oil. If this were the only change, prices would soften greatly but the rising demand from China and India would still, theoretically, support the market at prices approaching $80 – $100 a barrel. The rest of this OPEC killing scenario will be played out by China and the rest of the world.
Even though European countries lack the entrepreneurial initiative, thanks to arcane economic and employment practices, to solve problems like Americans can, they will jump all over the advancements in fuel economy that America and the Japanese develop. The best Europe has been able to accomplish after decades of gas priced higher than we are currently experiencing, is tiny cars with tiny engines. Still, Europeans will flock to more economical cars to escape the oppression of $8 a gallon gas. This will result in a further decrease in the global demand for oil.
The final blow will come from the Chinese. Unlike the Americans who arrogantly viewed our increasing demand and falling supply as an irrelevant statistic, the Chinese have acknowledged their exploding demand and, while vocal proponents are calling for America to undertake a “Manhattan Project” type attitude toward oil independence, the Chinese have actually launched their own aggressive initiative. They have spread their tentacles globally in search of oil projects, preferring to retain their internal supplies for the future. China has exploration projects underway in the North Atlantic, Africa and South America as well as off the Florida coast, just beyond our jurisdictional limits. At the same time they are working to cut deals with anyone who will come to the table with them for more stable long term oil supplies.
The Chinese may lack inventiveness but they more than make up for it in commitment and persistence. Oppressive dictatorships can create this kind of joint effort. Anyway, within 10 years, the Chinese will boost production enough to significantly, if not completely, eliminate their oil deficit as well. The overriding advantage and impetus to China attaining oil independence is that, as a communistic, totalitarian state, once they meet their nation’s oil demand through internal production alone, they can ignore world prices and determine the price of oil within their own country to suit their needs.
Additionally, China will embrace our new hybrid and fuel cell technologies and quickly ramp up production on their own ultra efficient vehicles. That, combined with an expanding nuclear energy program will significantly reduce or entirely eliminate China’s importation of oil from OPEC and other oil producing countries.
With America no longer importing oil and with China’s imports likewise headed toward zero, the countries that rely upon oil exports to fuel their economies will find themselves falling on hard times. The first signs will come when oil traders catch on to this eventuality and begin shorting oil futures. The price of a barrel of oil will tumble. As the member countries of OPEC find themselves exporting less oil at ever lower prices, their unity will evaporate faster than a Clinton’s commitment to a position once the polls go the other way. The oil sheiks’ loyalty to each other is based upon nothing more than the convenience of shared greed.
With the break in OPEC unity, countries will begin to vie for the dwindling demand by undercutting their alleged partners. This will only serve to accelerate the decline of oil and increase their financial woes. The end to the economic collapse of the OPEC countries will come about when the final reality kicks in, the one nobody talks about but is non-the-less true. The majority of the OPEC countries are economic one-trick-ponies. Saudi Arabia, Iran and Syria, as well as many of the other member countries, don’t produce any other products capable of sustaining their economy if oil revenues are significantly curtailed. They have survived and, in some cases, wallowed in their excesses off the abundance that happened to exist below their countries’ topsoil (sand) rather then their initiative and work ethic. In short, they don’t contribute to the betterment of the world in any meaningful way…they just sell what God created before they got there and direct the proceeds to the personal betterment of the fortunate few who are on the inside and the oppression of the rest of their society.
This self-centeredness will prove their undoing. As arrogant as we may have been in ignoring the signs which foretold our current troubles, the OPEC countries have totally ignored an obvious historical fact. America will take a lot of abuse but, once it gets its hackles up, it is capable of incredible accomplishment. OPEC ignored this reality and didn’t let “sleeping dogs lie.” They allowed oil prices to continue to skyrocket then rubbed their arrogance in our face by telling George Bush to take a hike when he met with OPEC leaders and asked for an increase in production.
Then, as if this weren’t enough of a slap in the face to the rest of the world, OPEC’s indifference toward human suffering with their refusal to donate meaningfully to the global humanitarian effort to provide aid to Myanmar following the devastating cyclone, further clarified just how far removed these people are from civilized societies. This sealed their fate as Americans fully realize just how important it is to shift the global economic power structure away from the OPEC countries and back towards more advanced cultures.
With the economic demise of OPEC, the economic forces supporting Al Queda and the other terrorist organizations will no longer be able to sustain their generosity and Al Queda, thanks to their lack of resourcefulness and complete disregard for the value of human life, the keystones of their attempt to subjugate the rest of the world, will implode.
Approaching 2020, as these scenarios play themselves out, oil will decline, slowly at first, then it will rapidly tumble to where oil will find itself falling back, first to $50 a barrel and finally, as OPEC countries scramble to grab whatever cash is still available for their soon-to-be marginally valued commodity, it will dip below $20 a barrel. Finally gas, for those who still use it, will be once again be cheap if not plentiful.
For me, this means I need to start buying and storing those 60′s – 80′s muscle cars and luxury cars that only got 8 mpg because, once we can afford to drive them again on weekends, they are going to enjoy a renaissance as we all long to re-visit the days when cars ran on gasoline, and throaty engine noises and burned tires. I am optimistic, very optimistic indeed, about the future. Let’s just get through this bump in the road as quickly as possible. We can do that by joining the war effort. Invest in alternative fuel projects and companies, move up to ultra economical cars and contact your Senators and Representatives and tell them to support exploration and production in ANWR and offshore.