I was recently reading in Barron’s (8/6/07) that some people expect the price of oil to drop. Joel Kurtzman from the Milken Institute thinks that the current prices are not sustainable once Mid-East fears calm down. Brent Heminger from Total Intelligence Solutions thinks that oil prices will not hit the high of $100 per barrel expected by Goldman Sachs. These people are looking out to 2009 which is surprisingly closer than I ever thought it was.
What does this do to the alternative energy market, innovation and investment? If oil falls back to pre-Iraq levels of $33 per barrel (or even to a more realistic $50 per barrel), what will the incentive for pursuing alternative energy be? Is global warming and national security concerns enough to reduce our use of oil?
I don’t think it will be.
There will be a slowdown on innovation if this occurs, but maybe some farsighted people will not want to be held randomly hostage to events and work to free us from this.
At best, lower oil prices will give us the time to prepare for a future shortage in oil, and at worse we will squander this time as we have in the past and worsen the environment with more pollution. But I hope that global warming is becoming viewed as a real threat and whether or not it is caused by human activity, I am confident there are things we can do to slow its progress.
