Originally Posted by
John E
The reason we do not currently see long 1970-style lines of cars at the gas pumps is that the government has not imposed price controls, but has instead permitted the market to function on supply and demand cues, as it does so capably. Cheap gasoline and government subsidies of private automobile usage have gotten us where we are now, and a steadily rising cost of fuel is probably the only way to break John Q. Public out of his addiction to underpriced energy.
I have been investing in oil and gas (e.g. APA and several "big oil" companies) and drilling equipment companies (e.g. BHI) for several years, much to the benefit of my stock portfolio and to the chagrin of my friends who are economics liberals. Do you have any particular favorite stocks in this sector?
My own view is that the world is far from running out of oil, but it is indeed running out of cheap oil. I also believe strongly that no single energy source can jump in and replace petroleum -- therefore, we need a multipronged approach which includes conservation, renewable sources, and nuclear power (fission now, fusion later).
When I was working on my doctorate in Environmental Science and Engineering between the 1973 and 1979 gasoline "crises," one of the oil companies used the advertising slogan, "A nation that runs on oil cannot afford to run short." We posted this prominently in our students' lounge, with the last word eliminated, which made much more sense to us, even back then. It is truly appalling to see how little America has learned since 1973.
As long as the market is kept free, there will be no shortages and no lines, because the price will keep going up to keep either from happening. Let's say some disaster suddenly cut off
half the oil supply to this country. The gas prices would spike, to whatever price is required to get people to drive half as much as they are driving now, perhaps jumping to $5, $8, $15 or even $20 gallon, whatever the market would bear until demand drops to equal available supply. With a few minor local exceptions here or there, there will be no shortages or lines. I mean, if people are lining up to buy your product, that's a sure sign the price is too low.
And as the price goes up, alternative energy becomes more and more affordable. Sooner or later we're going to realize the only way to go is nuclear.