The time of major investment in alternative fuel sources and renewed mass transit planning may finally be at hand. All it took was $4-per-gallon gas and no hope for relief anytime soon.
“From an environmental viewpoint, this may achieve what 30 years of [environmentalism] efforts couldn?t achieve,” said Dr. Daraius Irani, an economist with the Regional Economic Studies Institute at Towson University. “If the market keeps going the way it is, it may cut down on emissions, cause carpools,more mass transit. When gas is $1.25 a gallon, no one thinks about taking the subway.”
Despite driver outrage, Irani and other oil and fuel experts said the current gas prices were probably the new reality for America?s drivers. And the push for new sources of energy may come at just the right time, with some economists predicting a peak in worldwide oil production later this century.
OIL INVENTORIES
Will the world ever run out of oil? It?s a question many different groups with many different agendas are happy to take a stab at. But a real answer is in the works.
The International Energy Agency is studying depletion rates at about 400 oil fields in a first-of-its-kind study of world oil supply, the agency?s chief economist told The Associated Press on Thursday. The results of the study will be released in November.
The agency?s current forecasts put the oil supply at about 116 million barrels a day in 2030, up from 87 million barrels a day now. But the study is the result of uncertainty about supply levels and volatility in world markets, IEA chief economist Fatih Birol said.
“The growth in terms of production was not great,” Birol said. “We did not see enough investment.”
It takes about 10 years from the time an oil field is discovered to the time production begins, said Justin Paruchi, an oil and gas analyst with Chicago-based investment research firm Morningstar. The total amount of oil on the planet is estimated at as much as 4 trillion barrels, and the amount of consumed oil will pass the 2 trillion mark sometime in the next five to 10 years, Paruchi added.
A 2004 report by the Energy Information Administration, part of the federal Department of Energy, stated that “all or very nearly all” of Earth?s largest oil fields have been discovered and are being produced. The report concluded that the world?s peak oil production may occur sometime between2037 and 2112, but that oil will always be available ? for a price.
“Will the world ever physically run out of oil?” the report asked. “No, but only because it will eventually become very expensive in absence of lower-cost alternatives.”
LOOKING FORWARD
Oil companies have sunk money into those potential alternatives fuels for years with limited results, Paruchi said. Some such as oil shale, surface rock from which oil can be drawn, are only alternatives and not true replacements. But the search for a substance to wean society off oil has taken on new life thanks to driver demand for lower fuel prices and potential profits for companies answering the call.
“When oil is $20 a barrel, some of the alternative fuel energies just weren?t profitable like they are when oil is $120 a barrel,” Irani said. “Fuel at $60 a barrel is actually a good deal now.”
The money going toward alternative fuel projects are largely private investments, said economist Anirban Basu, president and CEO of the Baltimore-based Sage Policy Group. He said that while those investors seem to have concluded that the government doesn?t have the cash to back such research, investors will have to have the patience to let it bring new technology to market.
“It did take us seven or eight or nine years to land on the moon,” he said. “Would private capital have had the patience to wait for that?”
Eventually, the experts believe alternative fuels and new sources of energy will decrease demand for oil and shift energy markets in a whole new direction. But it won?t happen easily, and it won?t happen in time for your next fill-up.
“These high energy prices have finally tilted the marketplace toward looking at other options ? it?s about time,” Basu said. “Naturally people are impatient and would like to see these investments bear fruit immediately, but that?s not the way innovation works.”
The Associated Press contributed to this story.
