Invest It Wisely

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Weekend Reading: Oil Edition

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Oil Pump, Sunset. Source: http://www.arb.ca.gov/cc/oil-gas/oil-gas.htm

As the recent turmoil across the Arab world has driven oil prices skyward, I’ve had some thoughts about what this means for civilization going forward. Could our civilization truly function without oil? Are alternatives, such as solar and wind, truly “free” forms of energy?

I believe it will take time for us to shift from oil to alternative sources, and while I do believe that solar and perhaps fusion (in a very long time) are the ways of the future, it’s going to take a while to get there. I also think that every energy source has costs and that renewable energy sources are not really free. One must also consider the opportunity costs as well as energy return on energy invested — something that I believe corn ethanol failed miserably at, besides increasing food prices for the poor.

What are your thoughts on the future of energy and of our dependence on oil?

Contests and giveaways

Budgeting in the Fun Stuff is holding her first blogversary giveaway, with over $600 in prizes!

Control Your Cash is also holding a big giveaway with lots of great prizes at their recently redesigned site; the new site also looks really great!

Yakezie Writing Contest

There are a lot of great submissions over at the Yakezie writing contest site; here is one in particular that I’d like to share with you: War Torn, which is about the author’s experiences growing up in Serbia.

Weekend Reading


On the topic of oil, my friend Mich over at BTI always has interesting insights: Investing in Oil: My Bias for Canadian Oil Producers.

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  • Inside Job (Dividend Ninja)

Thank you (as always) for all of the great comments and feedback; I appreciate it and hope you all have a great weekend! 🙂

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Comments

  3. Thanks for the mention. I think we are slowly weaning ourselves off of oil but it is a real battle with emerging economies coming on. In the short term oil will spike and then probably fall off a cliff as supply comes from everywhere and previously uneconomical oil is pumped.
    A lot depends on the Saudis. In the meantime progress will come in fits and starts from alternative sources.

    • That’s an interesting take on it, but I definitely wouldn’t rule it out. As technology progresses we’re able to tap previously untappable sources, but the question of environmental practices will come out too especially in the wake of the BP spill.

  5. Hey Kevin,

    Thanks for including me in your blog round up; always appreciate it! Oil prices are reaching the point where we begin to see the negative spillover into the economy. let’s hope they reverse somehow. I do agree though; alternatives will take time.

    Have a good weekend. Mike

  6. Thanks for sharing my article on Buffett. I agree with your assessment re oil and alternatives. I think we need to begin drilling and trying to increase domestic production until alternatives become financially viable.

  8. Thanks for the mention Kevin.

    Sadly there are no alternatives to oil yet. We’re going to have to live with those prices for a while until they trigger demand destruction through a recession.

  9. Thanks for the mention in this roundup, and appreciate the links to Mises and other econ blogs. The one from Let a Thousand Nations Bloom was particularly interesting.

  10. Thanks for the mention, Kevin.

    I know you may not think this when you go to fill up your tank, but the cheapness of oil and related products keeps us dependant. If the price were to double or triple, I’m sure people would find other means of transportation, which should force companies to develop better engines.

    The oil shock of the 70s is what motivated Japanese car companies to create ligher cars and more efficient engines, which eventually brought us the hybrid.

    • I do think that were oil prices to shoot up substantially, we’d find a way to deal with it even if that meant driving underpowered cars and travelling less. What I think the real danger is the impact this is going to have on the poor and on the less stable areas of the world. People need to eat, otherwise they get very angry. We’ll just be inconvenienced, but very high oil prices will mean real hardship for many areas of the world and it also means, for better or worse, a US military that will find it increasingly expensive to project its influence.

      Long-term I don’t think oil prices are as significant a problem as some would make it out to be since many of the worst scenarios assume that technology is static, but short-term if the middle-east boils up in a rage then things could get pretty uncomfortable for a while. I think the market is being a bit bearish right now but I also don’t believe in market timing so we’ll just have to see what comes down the pipe.