Susan and I attended a benefit dance last night at the Pellatt United Firefighters (PUFF) Hall, with Kenora's Big Boogaloo playing. Let me tell you, this local group is composed of supremely talented musicians. Every one of them is at the top of his or her game. Big Boogaloo specializes in "blues, funky stuff, R n B, Latino and old-fashioned rock 'n' roll."
They do it all well.
We had an absolutely great time.
On this same weekend, world headlines read, with (implied) exclamation marks, "Oil price sets record near US$128; retail gas at new high!"
Here in Kenora, regular gasoline is presently retailing at $1.29 Canadian per litre (I pay about 10c more for premium for my otherwise fuel efficient BMW).
Despite Canada's having the world's richest oil reserves in proportion to population, we pay world market prices for carbon fuels, and still considerably more than our profligate cousins to the south (we are profligate too, but Canadians can still afford such extravagance - for now....).
I wish to bring to the reader's attention one simple observation.
While at the dance at the Pellatt United Firefighters Hall, Susan and I ordered water to drink. We paid $1.00 per half litre for ("plain") potable drinking water. The math is simple. That's $2.00 per litre - roughly a 50% premium to what Lake of the Woods area residents are presently paying for regular gasoline.
I haven't read any recent headlines proclaiming, "Canadian drinking water soars to $2.00 per litre!"
Accordingly, I believe that our (highly) distorted thinking will soon be altered by the current repricing of all forms of energy in world markets (brought on by the advent of peak oil).
Oil is still cheap.
Gasoline is still cheap.
Gasoline is dirt cheap at $1.29 per litre.
A look at the technicals reveals that oil is presently radically overbought, and it is topping out, as can be seen in the accompanying chart, available from Adam Hamilton at Zeal Intelligence. Barring a global catastrophe, oil is likely to cost less, not more, by the time this summer is out - perhaps below $100 per barrel again - considerably less than the market is paying today.
Please allow me, then, to offer an interpretation of these interrelated observations.
If oil is overbought and due for a pullback - while still selling at only 2/3 the price of drinking water - this "good news" is certain to represent only a temporary trend.
My call: I give oil three years at the outside to find a more reasonable value in its pricing relationship to water.
Mark my words, when oil finds a sustainable market price, we will be paying more for a litre of gasoline than we pay for a litre of drinking water.
So, either drinking water is going to get a lot less expensive - and fast - or gasoline is going to sell for more than $2.00 per litre, possibly considerably more. And it won't be long.
I give the trend reversal I am calling for three years at the outside.
|Declared reserves with suspicious increases in bold purple (in billions of barrels) from Colin Campbell, SunWorld, 80'-95|
|Year||Abu Dhabi||Dubai||Iran||Iraq||Kuwait||Saudi Arabia||Venezuela|
We've been living on cheap oil since the first oil well was drilled in Northwestern Pennsylvania in 1859.
We are still living on cheap oil at today's $128 per barrel.
$128 US per barrel remains a quite modest price for the substance that fuels our present opulent and wasteful lifestyle.
At this point, oil is probably going to get cheaper before it runs much higher in price (barring a catastrophic global event). But any pullback in the oil price will be temporary at best.
In three years' time, we'll be paying more for a litre of gasoline than we pay for a litre of drinking water.
Our grandchildren will never believe that we paid less for gasoline than we did for water - for the first 150 years of the oil age.
That era is passing rapidly, and it will not return.
The transition from inexpensive to costly energy will change almost everything about our present way of living, most importantly our unquestioned assumptions, our daily habits, and our present sense of entitlement to all the energy we need to do everything we want to do.
Here's the good news, though....
Dancing to the beat of Big Boogaloo does not require the input of oil-based energy (apart from the electrical power used by the band's equipment).
All the fuel we need for dancing at a local community event has already been stored by natural processes in our own bodies' energy reserves - and in that resource category, many of us have lots of extra stored energy to burn!
21 May 2008: OK, I have found it! Bottled water is controversial. Read all about it here (courtesy of Fortune).