With all the news lately about the price of oil climbing, I would like to make a contrarian point – I believe oil is cheap.
I realize American's can't afford to take their driving vacations, people in Europe are protesting, the economy is hit hard, and people are complaining.
My view is that cheap oil was an anomaly, a relatively short-term gift that we really never did deserve, and whether you agree with that statement or not, we can't replicate it. So we'd better get over it and move on, and get our energy in new ways. We need to start making those new ways inexpensively, and if we make them sustainable, then they'll last, and finally, we'll deserve it.
Okay, let me give you some numbers. Let's say a barrel of oil costs $143, about what it is now. That barrel of oil is equal to 1,640 kilowatt hours, or 1,640,000 watts for one hour. A human, working hard, can put out about 75 watts an hour, and that's not easy. Lance Armstrong, when he was younger, could do about 500 watts for one hour. So us regular people, working all day – if we even could – at 75 watts per hour, would have a hard time powering our lifestyles. It would take us nearly 22,000 hours to equal one barrel of oil. Even at today's minimum wage of $6.55 in the US, that barrel of oil is really worth $143,226 to us! In other words, it's 1,000 times more valuable than it costs.
We expect our energy to be nearly free, and that's why we complain – because it no longer is. But we should face those facts, realized how this unbelievably discounted energy we have had – and still have – is what makes us comfortable and productive. Since it's only going to go up in price due to supply and demand (the demand side especially from China and India) if we want to continue our lifestyles, we'd better make the renewable stuff scale fast and become competitively priced. At these prices of oil, it's starting to get easy, or should I say, possible. Rather than wishing for something that's impossible – nearly free fossil fuel based energy again – we should focus on the R&D to make the renewable stuff work.
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Is Oil Still Too Cheap? We need to get used to costlier energy and sailing is free.
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