Now that the media is screaming about the new bear market in energy, we need to address or confirm these myths, and understand what is really going on around us.
1) The war on terror has drawn a battle line in the sand. In order to effectively fight and defeat terror, you have to cut off the money supply to countries that support, and produce terrorists. Since the majority of the terrorists come from oil producing countries like Saudi Arabia, Iran, Iraq, Libya, and the Sudan, ending our dependency to their oil must be a priority. Oil profits earned from these countries go to other countries that carry out terrorist acts, and cutting off this source of funding seems to be a priority.
2) Transitioning our dependency will not be easy. It will take many years to find and produce domestic energy solutions, and if the incentive to do this declines, then ending our dependency to foreign oil will never happen.
3) The only incentive available to accomplish the goal of energy independence is higher oil prices. Think about it, what incentive does the average American have to cut consumption or buy a hybrid car other than skyrocketing fuel costs? What incentive do ethanol producers have to invest more money in alternative fuels if their competing product (oil) is cheaper to produce and use? What financial incentives do major oil companies have to extract oil from the Canadian tar sands or extract oil from oil shale if prices plummet? The answer is none.
If oil prices continue to decline new investments in drilling, extracting, and alternative fuels will quickly disappear.
Unless we have all been sold a bill of goods (and we might have), energy prices must remain high. Sure, there will be corrections along the way, but unless we have been lied to and mislead, our current discount of cheaper gas prices are only temporary.
