NPR’s On Point never disappoints, and their show with Christopher Steiner, author of $20 Per Gallon: How the Inevitable Rise in the Price of Gasoline Will Change Our Lives for the Better was no exception. Steiner’s thesis is that as liquid hydrocarbons become all the more difficult to naturally extract and regulation makes them all the more costly to refine and use, prices will inevitably rise. At $20 a gallon, we might not recognize our lives…all for the better, says Steiner.
People will live and buy their locally-grown produce in mixed-use developments clustered around high-speed rail lines. In Steiner’s view, $6 a gallon is an inflection point that begins to redefine the way we live our lives. But, will innovation (or the US government) ever allow prices to remain at that level? Not according to Mark Mills, co-author of The Bottomless Well: The Twilight of Fuel, the Virtue of Waste, and Why We Will Never Run Out of Energy.
In Mills’ reckoning, prices will never sustain that kind of climb. Our technology and innovation are too good and governments will unleash incentives to combat that kind of price climb that will result in more production of synthetic hydrocarbons. Moreover, long before we reach $20 a gallon, more expensive natural hydrocarbons (i.e., tar sands) will become competitive. What about Europe, you ask, where gasoline has sustained prices at $7 a gallon? Those prices have not pushed leading oil concerns on the continent dramatically innovate in production or technology and they have triggered a very different lifestyle – including smaller, more efficient cars and much broader use of public transportation. But, much of the gap in price between Europe and the US is tax. The revenue goes to governments, so the companies are not pushed to look for alternate fuels.
But, Mills view of innovation is not universal. According to October’s Esquire, the guys over at the Common Wealth Opportunity Capital are bullish on oil.
“Every ounce of gold ever mined is still here,” the hedge fund’s principal Reagan Silber notes, but “every single barrel of oil ever drilled is gone.” Silber doesn’t see acceptable solutions emerging in time. “If you are long on oil, you are short on ingenuity,” he concludes.
Whether you are an investor planning your portfolio, a futurist predicting the shape of our alternative energy utopia, or an industry insider trying to position your company for more market share, there is a lot up in the air; but, one thing is clear: our energy policy will dictate much about the way we live our lives — $20 a gallon or not.
[photo credit: Paul Garland]