I don’t know how your holiday went, but the once-a-year “respite” turned into a major annoyance for us and quite inconvenient to say the least. Just about one or so in the afternoon on Saturday, the power went off and stayed that way until early the next evening. Throw in some cold, rainy weather, and one has the makings for, well, annoyance and inconvenience. This unexpected conveyance of Natures’ will has got me thinking, again, about alternative energy production, both here at the ranch and all around the globe.
Some years back, I checked out solar and wind power for the ranch. Back then, the technology lacked and the cost was prohibitive. My-oh-my, how things have changed. Today, there are more choices, more efficient systems, and the costs have dropped considerably. Today, it is much more realistic to consider installing a system that in the least could act as a backup and cost reducer or in the most could provide all of our energy off the grid. Now consider this – If alternative-energy technology has truly become accessible for the consumer, how accessible has it become for industry? The answer is that alternative energy options for industry are now quite accessible and affordable. This paradigm shift means investment and trading opportunities in the energy and technology sectors. It also means that the push to move from oil to alternative forms of energy strengthens, which brings into question the longer-term price of oil.
I still argue that in the near term (2011), the price of oil will rise substantially based on supply and demand. Growing economies still need oil and there is much growth coming and coming fast. However, a piece of news that came across my desk today suggests that supply will increase somewhat to help satisfy the demand somewhat.
BAGHDAD – Iraq’s newly appointed oil minister on Monday said the country’s daily oil production has increased by about 100,000 barrels a day, exceeding 2.6 million barrels per day for the first time in 20 years. Abdul-Karim Elaibi said Iraq’s production of crude will continue to rise and will reach its planned, higher targets “sooner than expected.” The crude-rich nation plans to raise its daily output to about 12 million barrels by 2017.
Longer term, this could have an impact on the price of oil. I say “could” because we are at a crossroads in the transformation from oil to other forms of energy. If the transformation stays on track, we should hit critical mass sooner rather than later and synergy will take hold. Once that happens, the crossroads disappear and the momentum will flow in new directions.
I suspect “sooner” means within five years, so this makes the 2017 date for Iraqi increased oil production less meaningful when looking to the future of oil pricing. Don’t get me wrong. I am not definitively saying we will reach critical mass before then, but as of today, the transformation is happening at a much quicker pace, and this bodes well for the shift. True, the wealthiest and most powerful corporations on the planet, as well as some big countries, have a lot to lose with the decline in demand for oil, but once the momentum for transformation becomes synergistic …
Trade in the day; invest in your life …