Now Is the Time to Prepare for a Possible Oil Crisis

Although it’s a good thing for economic growth, I am somewhat disappointed to see oil prices falling. The downside to falling oil is it takes away the urgency to deal with the fact that oil is a finite resource.

People have called the recent rise in oil prices an “oil tax”. This makes some sense because oil fuels our economy. It's a misleading way, however, to model the effects of oil prices. Throughout human history, economic growth has been powered by human and animal muscle. Sun falls on the earth, provides energy for plant food, and we turn some of that energy into human and animal powered labor. We discovered that some of the energy from the sun had accumulated for billions of years and formed fossil fuels. This allowed the industrial revolution, in which production and human population peaked dramatically. A few hundred years of burning fossil fuels is the exception in human history. Calling rising energy prices a “tax” makes it seem like cheap energy is a birthright instead of a brief anomaly in the course of human history.

The issue of long-term energy supply, not the issue of short-term price fluctuations, should be our main concern. The world economy and the supply and distribution chains to provide for the needs six billion people depend on energy. We have a lot of good ideas for alternative energy, but we have no solid plan for how we will provide for everyone once fossil fuels become depleted to the point of being impractical to extract.

Hopefully, increasing fuel prices will be gradual. Those higher prices will encourage drilling for oil in more locations and will encourage finding better ways to get energy from fossil fuels other than oil, such as coal and oil shale. At the same time, these higher prices will encourage development of new energy sources. This hopeful scenario is the probable outcome, but “probable” isn’t good when the alternative outcome is the collapse of world economy. Even this hopeful/probable outcomes isn’t ideal. It has us involved in wars and trading with countries we disagree with for decades to feed the oil the addiction while alternatives are being developed.

The government should initiate taxes to make sure fuel costs stay high. This will encourage development of new energy sources on our own time table, rather than under crisis. The fact that there is no plan should scare the heck out of us. Now is the time to prepare for the unlikely possibility of seeing an energy crisis in the next few decades that is so intense it ends the world economy as we know it. Doing nothing would probably be okay, but let’s be conservative and take preventative action now.