everywhere, including the comedian Bill Maher, who urges us to trade in
big sport utility vehicles for smaller ones. Others say you should move
closer to your job or car-pool to work. Or don’t buy a bigger house than
you need; use public transport if you can. The truth is these are small solutions
to a much bigger problem. Many have observed that, unlike Europe,
the United States has been trapped in a pattern of suburban living
tied to the highways since the 1950s, which is supported by tax incentives
and cheap fuel. Long Island is a typical example and it will be hard to reverse
course. High oil prices may well be the shock we need to change
course.
THE FUTURE OF OIL AND THE AMERICAN DREAM
Although oil is known mostly for producing transportation fuels, it’s not
an exaggeration to say that it literally drives our planet. It’s the key source
of heat and a critical component of virtually millions of products, from
clothing to construction materials. But given that the supply is finite,
there are two inescapable facts about oil and other fossil-based fuels: The
supply eventually will be depleted, and at some point in the not too distant
future demand will outstrip production capacity.
Increasing demand, along with supply problems, has already begun to
drive energy prices upward. Recent oil price volatility serves as a warning:
Just as we’ve seen in the past two years, the price of energy, in particular
the price of oil, will increase as time goes by. Consumers should
expect to pay substantially more at the pump in coming years, while investors
should consider the pain at the pump an opportunity to profit on
energy equities.
How soon the world’s supply of oil and oil equivalents will be exhausted
is open to debate. There are a number of economic, political,
and environmental factors at play, including global economic growth,
Middle East violence, terrorism, and conservation efforts. Moreover, as
prices rise, new supplies of oil emerge as do efforts to reduce consumption.
At current consumption levels, experts say, the world’s known oil
supply could be exhausted within the next 30 years, but my guess is that
the oil peak could come in the next 15 to 20 years.
My 15- to 20-year estimate may even be optimistic as demand from
emerging markets, particularly China and India, is driving up global con-
26 THE END OF OIL