What Does Oil Below $40 a Barrel Mean to You?

By Bob Difley
“OPEC just announced it’s cutting production by 2.2 million barrels. Remember – this is on top of the 2 million barrels in cuts they’ve already made since this summer! These guys are serious about getting the price of oil back up right where they like it: $75 a barrel, $100 a barrel, $150 a barrel” Boone Pickens said this week. “Every time the price of oil drops, America falls asleep. The Saudis don’t. The Iranians don’t. The Venezuelans don’t. But we do.”
This reflected what President-elect Obama said on 60 Minutes a few weeks ago: “Oil prices go up, gas prices at the pump go up, everybody goes into a flurry of activity. And then the prices go back down and suddenly we act like it’s not important, and we start, you know, filling up our SUVs again. And, as a consequence, we never make any progress. It’s part of the addiction, all right. That has to be broken. Now is the time to break it.”
Then on Wednesday the Department of Energy in a new report stated that Americans will confront the inevitable rebounding of oil prices by using more biofuels, like ethanol and biodiesel, and buying more fuel-efficient cars, like hybrids, plug-in hybrids, and electric vehicles. The department’s Energy Information Administration (EIA), because of this trend, predicts that there will be virtually no growth in the the petroleum industry through 2030.
That is probably not good news for the petroleum industry, but is good news is, as the EIA predicts, it “breaks the trend” of almost guaranteed annual increases in petroleum demand that date bace to the 1980s. This reversal has already started, with petroleum use declining this year by about 5% compared to 2007. And you know what that means–a sharp decline in oil imports, the foreign oil that we need to stop buying from unfriendly nations that use the proceeds to fund terrorist groups.
Can we keep oil demand low? Can we conserve, drive less, and drive more efficiently? Will we buy smaller RVs, and more fuel-efficient toads? Will we support the expansion of solar, wind, and other forms of clean renewable energy so we can simultaneously reduce our use of the other fossil fuels, like natural gas and coal to fuel our power generating stations that in turn provide the charging power for our plug-in electric vehicles?
Or, as Boone Pickens says, with the price of oil currently so low, will we “fall asleep” and revert back to our wasteful ways? Or will we buckle down, get serious, support new sources of alternative energy, and not let OPEC dictate what price we will pay for energy?