Peak of the Week

A look back and a peek forward always allow us to put some things in perspective.

During the 1973-1974 oil embargo there was a disruption in the oil supply and we had to wait in line for gas. In many locations, an odd-even system was implemented based on the license plate number. Also, a restriction in the number of gallons of gas purchased was implemented. In the late ‘70’s, we would top off our tanks at every chance.

1975 the Strategic Petroleum Reserve (SPR) was established for emergencies. Today, there are about 727 million barrels of oil supply in the SPR.

Fast forward to 2011
Gas is about $3.50 per gallon. No long lines because supply is not the issue. Demand has weakened some but not by much! High gas costs to the consumer are in part due to the fall of the US Dollar.

Congress and federal agencies have banned oil activity from more than 300 million acres of federal land onshore and more than 460 million acres offshore in the past 20 years. An estimated 67% of oil reserves and 40% of natural gas reserves are locked away on federal lands in America’s western states.

So if supply is not the issue and demand isn’t the problem, releasing oil from the SPR will only result in reducing our oil savings account. To me, this is a spending problem!

Fast forwarding to 2025 …………….
The Department of Energy predicts domestic oil consumption will increase 43 percent by 2025, but production will grow only by 23 percent. This is a demand problem and higher prices. No action today nor was there action back in 1973 except for solar and wind energy alternatives – we certainly didn’t learn from history!

No action is to act.