Peak Oil is You

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Page added on September 28, 2009

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Preparing for the Oil-Driven Economic Collapse

Part of the problem with being an analyst is that we are expected to think as if we were living five years in the future.

While the market is undergoing a recovery at the moment, I was recently part of a massive panel of ex-Intel executives who were anticipating another collapse, this time energy-driven. It appears we have dropped into the five-year window of anticipating that.

Only China, at the moment, appears to be putting in place the resources to offset this collapse, and even it is not making the progress needed to fully offset it. However, what China is putting into place will make the problem even worse for us, and it is time to start thinking about this.

In the United States, oil is used widely for transportation, heat and for electrical utilities. This is particularly true of those generating plants that handle peak loads, according to the utility executives at the Intel Alumni meeting. The vast majority of these relatively dirty plants require oil.

As the nation recovers, our need for energy will increase along with the return to work and expansion and creation of new businesses. According to the experts on the panel, the market downturn has depleted most of the money needed to research, build, and drive alternative-energy solutions into the market. This means we are tied to oil for at least the next five to 10 years.

China, meanwhile, isn’t yet as addicted to oil as we are because it uses coal instead to produce much of its electricity. But it is dramatically increasing its need for oil. China also will face an energy problem because its massive growth is taxing its energy resources. In anticipation of future oil shortages, though, China has been providing low-interest loans to oil-producing countries in exchange for favorable treatment. In effect, it is buying up much of the world’s future oil capacity.

The latest credible projections I’ve seen suggest that this will come together somewhere in the 2013 to 2015 time frame, with the price of oil exceeding $150 a barrel and gas, at least in the United States, costing more than $7 a gallon and increasing dramatically from there.

IT Business Edge

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