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High gasoline prices - Just one piece of the energy challenge

By D. G. Martin
Posted Monday, March 15, 2004

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Why has the price of gasoline gone so high so fast?

This question was of the top of my list last week when I attended the conference on “creating a sustainable energy future” sponsored by Duke University's Nicholas School of the Environment and Earth Sciences.

I got a simple answer to that question from an informal conversation with an expert. I will share it with you at the end of this column.

But the conference itself was directed at our energy challenges in the long run. The conference organizers summarized our situation as follows:

85% of our energy needs are met by nonrenewable sources like oil, gas, and coal.

“We depend on hydrocarbons for more than 85% of our energy needs. While hydrocarbon use has led to enormous benefits to human civilization, we now recognize that supplies of this critical resource are ultimately finite, and its use has impacted human health and the environment. As supplies of natural gas, petroleum, and coal become more expensive, as environmental degradation increases, and as the possibility of regulatory limits on carbon emissions looms larger, we will be forced to transition into a new era of energy use.

“In order to move toward a sustainable global society, we must address both the finite supply of hydrocarbons and the repercussions of their use. Today’s leaders have a closing window of opportunity in which to direct our transition to a sustainable energy future.”

The conference brought together representatives of power companies, futurists, conservationists, think tanks, academics, and coal, oil and natural gas producers.

These folks had to face some hard facts:

-- 85 percent of our energy needs are met by nonrenewable sources like oil, gas, and coal.

-- The United States, with about 5% of the world's population, uses about 25% of the world's energy resources.

-- Currently, coal is the source of 50% of the electric energy produced in the U.S. (It is 60% in North Carolina.)

-- Much of the rest of the world consumes relatively little energy now. But the aspirations of those peoples for a better life (like what they see on American television programs) will lead to an incredible increase in energy demand--one that will almost double world energy consumption in the next 20 years.

Any hope that the group of conference participants could come to a quick consensus about how to achieve a sustainable energy supply was quickly dampened by their informed, but divergent, dialogue.

Power company representatives, although touting their commitment to reduce smokestack emissions, did not back away from their plans to base their primary power production on carbon-based fuels for the foreseeable future.

Oil, gas, and coal producers asserted that sufficient supplies of their products are and will be readily available. They committed to help develop technologies that would make their products burn ever more cleanly, but they did not concede the need to continue production.

The hopeful presentations of sustainable energy alternatives, like wind, solar and hydro, were met by high cost of their production and limited capability of expansion--and by the environmental problems associated with the increased use of each of them.

The conference did not produce a “magic answer” to the challenge of developing a sustainable energy program for the future.

But it was an important success in bringing together the people whose different points of view and various resources are essential to progress--and having them listen to and respond to each other.

Now, here is the answer to my question about the sudden rise in gasoline prices as it came from Michael Wang, senior vice president of John S. Herold, Inc., a firm that keeps track of world energy prices on a minute-by-minute basis. “It’s pretty simple,” he said. “And it is directly related to the sharp decline in the value of the dollar on the world markets. If you compute the world price of petroleum in euros rather than dollars, the price of oil is about the same. If you want the price of gasoline to remain steady, the best thing Americans can do is to reduce their government's budget deficit and their nation's trade deficit.”

His solution may be simple, but, like the search for a sustainable energy program, it sure is not an easy one.

D.G. Martin hosts North Carolina Bookwatch, which is taking a break during the special programming for UNC-TV’s “Festival.” It will return to the air in the spring.

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