US energy secretary Samuel Bodman has simple straightforward observations and recommended solutions on high energy (oil) prices.
The problem is…
Production has stalled since 2005 at 85 million barrels a day, while economic growth — particularly in China and India — has pushed demand ever higher, Bodman said before a meeting of ministers from the U.S., Japan, South Korea, India and China.
and the solution is to produce more and use less…
“We’re in a difficult position where we have a lid on production and we have increasing demand in the world,” he told a small group of reporters, dismissing the effects of speculation and unclear inventory levels and other factors on oil prices.
“I would devoutly hope we … see a reduction of the use of oil in the world on the one hand, and an increase in the supply so we can see some mitigation in the pressure on price,” Bodman said.
and he also suggests….
Bodman said he would likely urge China and other countries at the Japan meeting to slash fuel subsidies, which make gasoline cheaper for consumers — thereby giving them no reason to reduce consumption and allow prices to level off or drop. The International Energy Agency has estimated that oil subsidies in China, India and the Middle East in 2007 totaled some $55 billion.
At the same time, he urged nations to pay heed to an IEA report that the world needs $22 trillion investment in energy supply infrastructure by 2030 to meet rising demand, while developing alternative energy sources.
“We have a situation where we have these high prices and the only solution is to diversify your resources, diversify your sources of fuel,” he said, listing nuclear energy, natural gas and renewable sources such as wind and hydropower.
Note the variety of recommendations Bodman proposes. There isn’t a magic bullet, there is a summation of solutions that are larger than the whole. I think everyone agrees that using less fossil fuels is a good thing, but the correct path is to use all the tools at our disposal in an urgent fashion with all the doomsday global warming talk and wasted energy blaming “big oil”.
And transparency would lead to fairer pricing, and in my opinion less volatility in the pricing…
Lack of transparency in the oil market has also been cited as a possible cause of higher prices. Bodman said that while the United States and host Japan have been “diligent” in disclosing production and consumption data, some other countries need to do more.
Proponents of such transparency, including the IEA, say greater disclosure of accurate statistics helps markets set prices that more precisely reflect supply and demand. Underreporting of production, for instance, can drive prices higher as traders think supply is lower than it actually is.
