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The Future of An Oil-Driven Economy

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On: Thu, May 6, 2010 at 9:04AM | By: Sherry Christiansen

The Future of An Oil-Driven Economy

There is no doubt that oil is the resource that makes nearly every component of the US economy function, either directly or indirectly. It provides 40 percent of the nation’s power supply and provides a whopping 97% of the country’s fuel used for our transportation system, including cars, trucks, airplanes, etc. We have put our entire economy (and means of survival) in the hands of a non-renewable resource that may be used up within the next 30 years.

The "oil peak" is a projected event where oil is increasingly plentiful on the upslope of the bell curve, and increasingly scarce and expensive on the downslope. The peak of the curve coincides with the point at which the supply of oil has been 50 percent depleted. Once the peak is passed, oil production begins to go down while cost begins to go up. The idea of peak oil has grown from a marginalized theory to a serious point of debate within the mainstream energy investment and business communities.

The dependence on foreign oil for our gas-guzzling lifestyle is destroying the environment, not to mention our economic stability; with fluctuation of gas prices drives prices for just about every industry. An oil-based economy, such as ours, doesn't need to deplete its entire reserve of oil before it begins to collapse. "A shortfall between demand and supply as little as 10 to 15 percent is enough to wholly shatter an oil-dependent economy and reduce its citizens to poverty." In the 70s a reduction of 5% of the oil supply caused prices to triple at the gas pump; just imagine how much a loss of 50% or more could impact our economy. In the event that the demands for oil begin to exceed the supply in the near future, there is a high risk of an after-effect in the food, transportation, heating, and retail sectors.

Many industry experts have predicted that peak oil could be upon us as early as 2015 (according to “The industry Taskforce for Peak Oil and Energy Supply). Others argue that the oil supply is, in fact, endless, and that we will never run out. It’s difficult to know for sure, but with China and India increasing the global demand (not to mention the 20 million barrels of oil used by the U.S. every day), the idea of never running out seems preposterous.

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RoadKill | 2:03PM (Thu, May 6, 2010)

BP is doing their part to drain the oil reserves down all by themselves...I wonder how long before this disaster in the Gulf is used as an excuse to raise the price of oil; which will be an excuse to immediately raise prices at the pump?...BOHICA!

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