May 11, 2004
Kamloops Daily News


Drivers got a glimpse of the future as gasoline prices
recently climbed to 93 cents nationally - - and they didn't
like what they saw.

They are not ready for a world with no oil or gas.  No
wonder.  World leaders, private and public, have failed to
prepare consumers for that day.

Leaders of the automotive industry have failed to mass
produce fuel-efficient vehicles.   The leader of the world's
superpower tells us not to worry, that there is always
another oil-rich country to invade.

Consumers grasp the economics of supply and demand.  They
willingly pay more for bottled water, for example, because
they know that drinkable water is becoming scarce.

Yet consumers seem willfully blind to the economics of
running out of oil.  Their explanations are elusive: "not in
my lifetime,"  "they'll find a cheap alternative soon."

The future has more rude surprises in store,  says Professor
William Rees of the University of British Columbia.  Today's
prices aren't too high, they are too low.  The true cost of
gasoline is being hidden from us.

In Canada and the U.S., drivers are sheltered from the
actual cost of gasoline in a number of ways.  One is
government subsidies for exploration.  Governments also give
tax breaks oil companies as if they were just  starting up. 
The oil industry is mature and doesn't require tax breaks.

If oil companies are getting tax breaks, then you and I are
making up the shortfall.  Tax breaks should be given to
small businesses, funding for alternative fuel research, 
and to low-income Canadians to help shelter them from the
true cost of gasoline.

Artificially low gas prices benefit those who consume the
most fuel.  If you drive an fuel-efficient car, you are
subsidizing the driver of a gas-guzzler.

Tax collected on the sale of gasoline partially compensates
subsidies given to big oil companies but there are still
other costs not included.

Add the social cost to our health care system of breathing
the pollution from burning of fossil fuels and from motor
vehicle accidents.  Add the cost of building more roads. 
Then the true cost is in the range of $2.20 to $5.95 per
liter, says Rees in his article for the Canadian Centre for
Policy Alternatives.

Add the costs of maintaining an abundant North American
supply of oil.  North America is running out of oil, but
prices don't reflect that.

Oil extraction peaked in the U.S. in 1970, and in all North
America in 1984.  The world is running out of oil.  The rich
North Sea fields off Britain's shore peaked in 2000.  Many
studies indicate that by 2010, world oil production will
have peaked.

By 2020, there will be a 20 per cent shortfall.  That
shortfall has to be made up from "unidentified
unconventional sources"  says the International Energy
Agency.  Translation:  we don't what will replace oil or
where it will come from.

With North America on the downhill side of production, the
prices should be much higher.  The reason they are not is
because the U.S. uses it's military might to secure oil
reserves elsewhere.  The cost of the invasion of Iraq is
currently $1 billion U.S. dollars a day.  If military costs
were included, the true price of gasoline would be higher.

The development of alternative sources of fuel is being
inhibited by artificially low gas prices.  Developing
renewable fuels such as hydrogen from water, diesel
replacement from vegetable oil,  ethanol and methane from
biomass is expensive.  As long as today's cheap gas is
around, no one wants to put research money into technologies
that won't pay off in fuel sales.

Burning a nonrenewable fuel is the waste of precious
resource.  When we run out of oil, we are not just running
out of gasoline.  We will run out of the raw material to
make thousands of products such as plastics, paints,
medicines, and pesticides. 

The shock that drivers now experience is nothing compared to
the shock the world will face without oil.  Higher gasoline
prices would not only ease that shock but actually benefit
society. 

Sensible urban planning would reduce the need for cars and
improve health through exercise.  Imported and
factory-farmed food would be too expensive, benefiting local
farmers.

Future generations will look back at our ignorance and say
"our great grandparents had a precious gift from the earth
and they burned it?  What a shame."

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