This morning, CNN will be running Ask Velshi.
CNN Senior Business Correspondent Ali Velshi hosts a live radio broadcast today at 10 a.m. (ET) on CNNRadio and CNN.com Live. “It’s Not Just Gas” takes an in-depth look at why oil is bought and sold on speculation, how the oil market is different or not from the housing and stock market and what’s the real long-term projection for oil and gas prices.
Notice the focus here: “speculation” … “market …” before we get to the fundamental issue, “the real long-term projection …”
For those who are interested, here is the comment that I submitted to CNN:
With Peak Oil seemingly upon us and rising costs for all construction/exploration, it is hard to see where supply is going to seriously expand.
In the face of this, combined with Global Warming, isn’t the key answer working on demand through efficiency measures, both immediate and longer term.
What are immediate potential items? Having tires inflated to proper pressure, replacing air filters, driving less aggressively.
What are intermediate measures? Better traffic management, encouraging public transit use, tax benefits for carpooling, time shifting work (telecommuting, compressed work weeks,
What are mid/long term measures? Perhaps the most important direct one would be electrification of ground transport (both vehicle and rail), but also smart growth, public transport, and development of alternative fuels to fulfill an ever decreasing demand for liquid fuel.
Let’s stop screaming about speculation, as if prices will magically fall to the 99 cents a gallon I paid a decade ago, and focus on the substantive issues of tight supply, rising demand, and pollution implications. These three combine to show that we must focus on reducing our demand, to end our addiction to oil, rather than focusing on the impossible of an ever increasing supply.
‘Speculators are driving oil prices up unnaturally …’ Truly, focusing on “speculation” misses the boat.
‘Just like the housing bubble, oil is in a bubble, and we could have a massive drop in oil prices …’ Focusing on comparing oil to the housing market misses the boat.
World production of oil is flat, it looks to be in the plateauing stage that Peak Oil modeling suggests would occur before significant drops occur. Alternative fuels (whether tar sands, shale oil, heavy oil, ethanol, biodiesel, or otherwise) have a variety of promise but it is hard to see where these will (in the face of Peak Oil) be able to expand to deal with unchecked demand growth.
Which returns us to the criticality of focusing on demand curves. While we should be looking toward increasing supply (responsibly, in face of Global Warming and other constraints (agricultural limits, water, food, etc …)), any serious effort re our addiction to oil should have a major focus on reducing demand.
And, the benefit of dealing with demand: it is highly profitable. The “NegaGallon” (like the negawatt) is the cheapest gallon of them all (especially with gasoline at $4 a gallon and going upwards).
Let’s hope that Velshi spends some quality time focused on the real issues and real solutions.
Energy Smart 
It’s not just speculation. For some reason the press forgets the other major reason — it’s a lack of refining capacity. This has been an issue for years! The government should make oil companies spend a percentage of their TAX BREAKS on new refining capacity.
JR — So, you believe that we can and should produce our way out of the problem?
I have been asked to forward question to Ali Velshi. We are wondering who provides the gas to Israel? And why is it that we produce and have oil in this country but depend so heavly on foreign countries to provide?
Maggie,
Why in the world would you be bothering with this comment here?
1. RE Israel, look up the data. In any event, it is a world market and they are a purchaser.
2. The United States (48 states) hit Peak Oil in 1970. There are physical limits to how much oil can be extracted. And, if we pump faster (and pump everywhere), the United States simply runs out faster. The US has roughly 3% of world reserves while it uses roughly 25% of world demand for oil (while producing about 10% of world oil). Hmmm … does that give any idea why “we produce and have oil in this country but depend so heavly on foreign countries to provide” oil for our wasteful energy use?
My kids asked me this question, which I thought was very insightful. How can the US bail out the financial markets if we don’t have the money in the first place? America is in a deficit situation. We have no liquidity to bail out ourselves let alone every financial institution who makes bad business decisions.