Gas prices are over four dollars a gallon in most places, and seem destined to go much higher. Environmentalists are worried about drilling for oil in sensitive areas and/or offshore. The twin dilemmas of Global Warming and terrorism confront us daily with concerns for our future. All of these issues combine to give us cause to pause, and look for alternatives to fossil fuels.
Yet, which way should we go on the Alternative Fuels Highway's? Some people push for ethanol, as it can be done by a simple change to the internal combustion engine. But, ethanol needs corn or sugar cane to truly be productive. The problem there is that it takes food away from the general public.
What about electric cars? Yes, they have the virtue of zero-emissions, but they still have to be charged. So, where does that power come from? Well, some would say you just plug into any outlet, and you are set. Still, there is the little matter of where that power comes from. Most power plants these days are coal, oil, or some other fossil fuel. So, even an electric car can contribute the problems of Global Warming, dependency on foreign oil, and so forth.
This is where hydrogen fuel comes into play. Now, some people would argue against it. The technology is not ready; the infrastructure is not in place etc. Well, the technology is here! If you do a simple search online with something like Yahoo, MSN or Google, you will find a slew of devices that make use of hydrogen technology. To fully convert your car to run on hydrogen is expensive, but you can go with a hybrid, and the cost is only a few thousand. Here again, that may sound like a lot, but when you consider that you will then be able to thumb your nose at high gas prices, and save a bundle; it is a wise investment.
Of course, some people will ask where you are expected to get the hydrogen to fuel your car. Here again, the basic technology is there. You can set up your own little mini-pump to collect and store the hydrogen. As for the issue of widespread distribution (a viable infrastructure), that is being implemented even now. The state of California has mandated that hydrogen fuel stations be setup across the state. And, as California has a huge number of vehicles on the road many millions, the state has an enormous influence on the nation, and on the automotive industry. If California pushes for something, and gets it, you can be assured that the rest of the nation will follow their lead in very little time. So, hydrogen stations will start to appear, even as more and more hydrogen vehicles enter the marketplace.
Yes, the cars do cost more, but look at all the pluses. They produce water as pollution, you have no need of high-cost gasoline, and you will not be contributing to the problem of Global Warming. Add to that, you won't be sending your money overseas to nations that do not have our best interests at heart. With all of those factors on the plus side, it is easy to see that hydrogen technology is the wave of the future.
As of the day of this writing, the national average price for gasoline is $3.55 per gallon in the US. When gas was under $1.00 the prediction was made by this author it would go to $3.00 per gallon. Here we are with gasoline priced well over $3.00 per gallon, and I am now convinced that the cost of gasoline will reach $6.00 per gallon in the United States at some point during 2009.
There is not much that can be done to prevent that from happening. To understand why, we need to look at the factors that are the causes of the price rise. Basically there are three: supply, demand, and the value of the currency.
Supply is near or at 100% of capacity. There is only so much oil that can be pumped out of the ground. The amount of crude oil that can be pumped daily out of the giant Cantarell oil field in Mexico is declining rapidly. After peaking at 3.82 million barrels per day in 2004, Mexico's total daily production is falling by as much as 8% per year. North Sea oil output peaked in 1999 at 2.91 million barrels per day. Daily production has since fallen to 1.81 million barrels per day. Similar reductions in daily output have occurred in the United States, Russia, Iran, Argentina, Peru, Columbia, Australia, Turkey, Libya, Egypt, South Africa, Spain, France, Algeria, Pakistan, Yemen, and a host of other countries.
However, not all countries have reached peak. Some analysts claim that Saudi Arabia will not reach peak production for a few more years, while others claim Saudi Arabia is at peak now. Regardless of which analyst is correct, Saudi Arabia is getting close to peak. Brazil, Venezuela, and Iraq have yet to reach peak oil output. However, the amount of spare capacity available in countries that have yet to reach peak oil production does not exceed the declines experienced in countries experiencing declining oil production.
While supply remains constant, demand continues to grow at a steady pace.
For decades, giant US corporations have been moving their manufacturing plants to foreign countries to take advantage of lower wage costs. Since the source of any country's wealth is it's natural resources and manufacturing ability, all those countries which have created manufacturing plants are now becoming wealthy. Citizens of those countries are moving from poverty to middle class. In the last 2 years alone Brazil has lifted 20 million citizens from poverty to middle class. China and India have done ten times that amount.
All these new middle class consumers want the lifestyle enhancements common to the middle class: more meat in their diets, better homes, and a means of personal transportation for more distant and frequent travel. All of those require energy.
If supply and demand figures were not enough to cause energy prices to rise significantly, there is another factor as well: the value of the US dollar.
The international value of the dollar has been declining for the past few years. The decline is accelerating due to the subprime mortgage crisis. While this is a topic that requires an entire article to itself, the short version is that the Federal Reserve is diluting the value of the US dollar by creating billions of dollars out of thin air in order to bail out the giant Wall Street firms which have created a financial quagmire. While the subprime mortgage crisis is very serious, it pales in size compared to the real crisis, which is a result of artificial valuations of structured financial packages that include trillions of dollars of derivatives.
The worlds financial system is freezing up and crumbling as a result. The Federal Reserve has already stated in the recent Bear Stearns case that these firms are too big to fail and will be "rescued". They are too big to fail because of the derivative contracts that they have issued. If one of these giant firms fails, all of their derivative contracts also fail. That would create a domino effect throughout the world, and the world's financial system would instantly seize up. This is no small matter.
The Federal Reserve has no choice but to continue to bail out these firms. And the method of "rescue" is to create money out of nothing and loan it into existence to these firms. In the past several months alone, over a quarter of a trillion dollars have been created in bailout money in the United States. This will continue. The result is a constant diluting of the value of the dollar.
When currency is created out of nothing and injected into an economy, it takes a while for the dilution process to occur. The lag time is typically 5 to 8 months. Therefore, the money that has already been created in the spring of this year will cause the negative effects to be felt in the fall and winter of this year.
More bailouts are coming, but I cannot accurately predict the size and speed of those bailouts at this time. Therefore I do not know how high gasoline and energy prices will go. It is a matter of constant monitoring in order to view the current rate of dilution of the currency, and forecasting the results 6 to 9 months into the future.
Based upon what is happening right now, $6.00 gasoline in the US in 2009 is better than an even bet.
Both Paul Fitzgerald & Jennifer Stromsteen are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Paul Fitzgerald has sinced written about articles on various topics from Marketing Tool, Massage and Environment. Did you know that you can ? You can run your car on water, supplemental to gasoline, to increase your car's fuel efficiency and. Paul Fitzgerald's top article generates over 5000000 views. to your Favourites.
Jennifer Stromsteen has sinced written about articles on various topics from Real Estate, Brain and Anger Control. Stromsteen has many years experience in the finance, real estate, and insurance industry. Besides her own website, , she contributes to the websi. Jennifer Stromsteen's top article generates over 74000 views. to your Favourites.