Is the high fuel cost necessarily bad?

Categories: Wormie Says

The price of oil has been steadily going up since last year. Currently the price of a barrel of oil stands at US$70. Is the high price of oil necessarily bad?

On the people level, high prices of oil create hardships. This is because everything is tied to oil, either directly or indirectly. Oil is the main source of energy for much of the industry. Oil is needed for transport, for generating power, generating heat, powering electricity among others. Therefore it is easy to see why high oil prices means higher prices for nearly all consumable goods.

However if we look at the bigger picture, high oil prices may be a blessing in disguise. For years, oil has been the main source of fuel that drive our industries. Nuclear energy was introduced in the sixties but because of public outcry regarding the safety and its waste products; coupled with accidents like those that occurs in Long Island, New York and Chernobyl, no nuclear plants were built for the last decade. Other forms of energy sources like solar energy and wind energy, are experimental at best. Expert has estimated that the world's oil reserve can only last for about 50 years. This means that in half a decade, the world will run out of its main energy source unless alternatives are found. For years, scientists have worked on these alternatives sources but has limited success partly due to the limited funding and partly because of the high cost of alternatives energy sources compared to the price of oil. Imagine what would happen to the world's industries, if oil prices continues to be cheap with the threat of the oil wells drying up? Overnight the industries would grind to a halt, much hardship will ensue and life as we know it will never be the same again. Therefore, the high oil prices serves as a catalyst to speed up the research into alternative energy and also to enable the scientists to relook at other alternatives which were deemed too expensive to produce. In this way, old technology can be improved to further reduce the cost and increase on the efficiency to the extend that such technology becomes viable at today's oil prices.

A good example is oil from oil sand. In 1979 it cost C$25 dollars to produce a barrel of oil. However this has dropped to C$13 in 1998. Because the price of fossil oil cost around US$30 in 1979 and about US$40 in 1998. Therefore it can be seen that once a costly production production process has become cheaper and at the same time. Even if the production cost had remained the same, this has become viable just because the cost of fossil fuel has increased twofold.

On the people level too, the high price of fossil oil may serve as a warning and hopefully change the way people live their normal lives. Currently, we have been using technologies that essentially guzzle up energy. All this is done in the name of progress. We now have super skyscrappers, convention halls and megamalls which needed ever bigger air-conditionings. We build bigger and more powerful cars that literally drinks petrol. All this is done without much thought to either the oil reserves or the environment. The problem of oil reserves or the global warming seemed so distant and therefore out of the radar screen for most people. However with the skyrocketing price of oil, things have changed, because now it hits where it matters most - the pocket. No amount of education and common sense can be more efficient than hitting the pocket in attempting to change people's habits. Now people gets to experience what it might be like in 50 years time when, because of the dwindling oil reserves and without alternative energies, the price of fossil fuel would most probably surpass the current record prices. People at that time will have to be prudent in their daily lives. The use of air-conditioning would be curtailed, private transport slowly replaced by public transport, use of smaller and more fuel efficient cars, alternative forms of transport, etc. It would be very difficult to suddenly change our way of lives in a short time but if we start to change now, maybe when the time comes, maybe life would not be so unbearable.

So is the rising cost of oil neccessarily bad? It may not be. In the short run, yes! But in the long run, it will act as a catalyst and an 'encouragement' for the scientists to come out with alternatives source of energy or to relook at previous technologies for their viability.