Tuesday, May 24, 2011
The End of Cheap Oil
The Wall Street Journal posted and article today entitles "The End of Easy Oil." If this article is factual, which I believe it is, it means that there will soon be a new energy crisis in our world.
Saudi Arabia has long been the largest oil producing nation in the world. It produces easy to access light crude which is also the easiest oil to refine. They are running out of this easy access and easy refining oil. They now must drill deeper for heavier crude. This will not only slow down the daily barrel production, but will also cost more to produce. This may be good news for drilling companies, but will be bad news at the gas pump.
Auto manufacturers would do well to increase the production of hybrids, and alternate fuel cars. Although there has been a temporary cutback in the use of gasoline due to the high price, this will, indeed, be temporary. More and more of the third world are now driving cars, using electricity, and putting higher demands on energy.
A higher demand on oil, with higher costs to produce a lower quality of crude, will certainly mean we will pay more at the pump. I desperately need a full sized pickup truck that gets 40 mpg. It already costs me $90 to fill it. What will that be two years from now? :-(