Gas Is Too Cheap

Gas prices are too low. Far, far too low. Within decades we will regret ever charging as little as four dollars a gallon for gas.

Divide global oil reserves by global oil consumption and we’ve got 33 years left.

Oil is a limited resource, and we’re going to run out of it. That’s not some liberal projection; that’s math. That’s reality. We should be preserving the oil we have for essential things, like farming, and restructuring our communities to reflect the coming post-petroleum era.

At the very least we, as a society, need to stop subsidizing fuel prices before our runaway consumption leads to an inevitable disaster.

The Blame Game

Disagree? You’re not alone. Gas prices being too high is the topic de jour in the media right now in America, and everyone is looking for someone to blame.

Some say the problem is jerks in the Middle East, demanding basic human rights and dignity without stopping to think what impact this might have on gas prices. Others say the problem is entirely based on Wall Street, as speculators drive the price higher and higher just to earn more greedy money.

Others, seemingly out of habit, blame Obama. The President can, after all, magically control gas prices; he is only increasing them now out a deep-seated hatred for America.

Regardless of the reason for the price increase, however, I think it’s a good thing prices are rising. Don’t get me wrong: I do have sympathy for working class families hit hard by increasing prices, and the economic recovery is being hindered by the rise. Still, these problems are superficial compared to the ones we’ll face if we let gas prices stay this low for much longer.

Until what we pay for gas accurately reflects the long-term consequences of using gas, we’ve got problems on our hands.

Not What You Think

Before you start ranting in the comments, denying climate change is an issue and stating the wars in Iraq and Libya have nothing to do with oil, know one thing: my argument requires neither that you believe climate science is valid nor that our foreign policy has consequences. It is, and it does, but realizing gas it too cheap requires accepting neither premise.

No, realizing gas is too cheap requires only some basic math.

Don’t believe me? Follow along. I’ve made a few calculations using WolframAlpha, an online tool that can calculate just about anything. Feel free to check the links below to check my work.

Simple Calculations

America consumes 18.6 million barrels of oil a day. That means that, on average, an American consumes 0.06 barrels of oil a day. It takes 16.66 days, or just over half a month, for the average American to use up a barrel of oil.

No problem, right? After all, a 2002 estimate claims world oil reserves total around 1.326 trillion barrels, so there’s a lot of oil to go around yet. Divide world oil reserves by US oil consumption and you’ll find that we’ve got 145 years and 9 months left before we run out of oil.

There’s one obvious problem with that calculation, of course: more countries than America use oil. China consumes 8.2 million barrels of oil a day, for example, and Europe uses 15.39 million barrels a day.

(That’s right: America uses more oil than all of Europe combined, despite Europe containing 286.5 million additional people. USA! USA! USA!)

Anyway: if you add up the oil consumption in China, Europe and America you get 42.28 million barrels of oil a day. How long can the world’s oil reserves hold out against that combined consumption? 64 years and 5 months.

That’s just America, Europe and China combined. Never mind India (2.98 million barrels a day), Latin America (8.089 million barrels a day) or the rest of the world. Take every country out of the picture besides America, Europe and China and we don’t even have 65 years left.

I can reasonably expect to live that long.

Divide global oil reserves by global oil consumption and we’ve got 33 years left.

Most people on earth can expect to live that long.

But wait: there’s more.

All of these figures assume that current oil consumption will remain static in the coming decades. It won’t.

In most countries on Earth oil consumption has been trending upwards for years, even accounting for the decline caused by the recent depression. China and India will see particularly big rises as their economy awakens.

It’s also worth noting that much of the global oil reserves will never actually be extracted for a variety of reasons. Some would take more energy to extract than they would provide, and some are too environmentally risky.

No Easy Answer

So what solution do I offer? I mostly just want people to realize that our current era, of cheap energy, could well be an unusual bubble in global history.

We should probably stop subsidizing sprawl, shifting infrastructure funding away from expressways and toward sidewalks and bike trails. We should certainly re-think any subsidies of the vehicle industries.

More importantly, though, we need to take the need for alternative energy a lot more seriously, because non-renewable energy sources run out by definition. Increasing the tax on gas to help research these alternative could be a step in the right direction, but that might not be politically possible. Our society it built on the assumption of cheap gas, and people won’t give that assumption up until it’s too late.

Why should they? Gas it too cheap for anyone to take the idea of oil running out seriously.

Few things happen without some sort of economic motivation, and at four dollars a gallon people are just barely starting to change their lifestyles. Be it purchasing efficient cars or driving less, or even using a bike instead of driving, change is happening. Any action government takes to reverse this would be a mistake.

5 thoughts on “Gas Is Too Cheap

  1. I saw you post a similar figure on your facebook the other day, and it stuck with me. I work road construction in Alberta during the summer months, and looking around at the ever increasing infrastructure in this, the most oil rich part of North America, it haunts me a bit what will happen in 30 years. Well, it haunts me a lot, actually.
    I mean, you know what I’m talking about. We were both reporters in the heart of OIL COUNTRY.
    It’s hard not to think what sort of place Alberta will turn into without long-term sustainability. And, of course, the biggest, most glaring embarrassment to me is that Alberta, more than any place on the planet, has the funds and time available to transition their economy over the next few decades to some other form of sustainable industry.

  2. In the 1970s all the greatest scientific minds did the ‘when do we run out of oil’ calculations. We have been out of oil since 1990.

    Has math changed that much?

    Is there a bent or agenda in the formula?

    Are people overlooking certain details, like technology on purpose?

    If not the market then who should be setting the price? Taxes are already artificially raising it as things stand now.

    Put a little more thought and research into the next article and less effort to push a delusional personal opinion.

    • First of all: good point. This has been predicted for a while. We discovered a lot of oil, designed lighter, more efficient cars and built buildings that wasted less energy. This happened because of price increases.

      I think the market should set the price; I really do. The problem: as soon as the price goes up to realistic levels, people on both side of the ideological spectrum argue that the government should so something to bring them back down. That’s not okay.

      It’s been pointed out that my calculations are crap. I can accept that. Oil reserves evidently refer to what can be profitably extracted right now, which of course is always changing. What I can’t accept is that oil will last forever and ever, amen. It will run out, and we will regret wasting it when it does.

  3. Justin,

    I found your article very reasonable and having plenty enough research for the size.

    There are plenty of scientists in the field today who are sending out similar warnings.

    It has been pointed out by others that we also cannot just go on full-speed and then hit the point when there is no oil left. Clearly before that time ever comes, there will be rising prices, rising unemployment, riots, starvation, and possibly even wars.

    We also must consider that it is not just transportation that will be affected. Much of our fertilizers and pesticides come from oil…and our plastics.

    Then we must also consider that it is not just oil that is involved, but coal as well (which powers many of the electrical plants)…this is also a non-renewable resource whose reserves are facing depletion.

    Finding alternative sources of energy is certainly something that should be done, but the real solution would have to address our selfishness, which has caused us to live so extravagantly, and waste these resources. If that is not cured, we will just go on to waste one resource after another, until life itself is unsustainable.

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