The oil and gasoline shortage is permanent and will only get worse over the next decade or two

Surviving the Energy Crisis

by William Cate

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Hydrocarbons (oil, coal and natural gas) are nonrenewable resources. The first time that a caveman threw a hunk of coal on the fire, we had started the depletion of our energy resources. There is a limited amount of coal, natural gas and oil in the world. While we haven't found every possible barrel of oil or gas dome, we've probably found most of the available energy resources.

Hydrocarbon prices are a function of supply and demand. The supply is fixed. As the average family lifestyle has improved, the demand for energy has grown. It's the basic reason that regular gasoline 50 years ago in California was $0.34/gal and today it's about $3.40/gal. U.S. demand for energy has slowly risen since World War II. Good relations with oil exporting nations allowed the gas price to rise at less than the inflation rate for most of this period. However, in the past ten years, there has been a radical increase in demand for energy by developing countries like India and the People's Republic of China. Their demand for energy is directly related to the improving standard of living in their country. The result is increased demand can't be offset by increased production because we'll quickly exhaust the remaining world oil supply. We are between a rock and a hard place. Curtail energy consumption in the Developing World and you increase poverty. Allow it to increase, and the West will pay dearly for energy and all nonrenewable resources.

Hydrocarbon shortages are only the tip of the iceberg of the problems the world faces with the limited supply of all nonrenewable resources. To improve the lives of everyone, we will be paying dearly for everything. The Crisis is permanent and will only get worse over the next decade or two. There are lots of things governments could do to hold down the demand side of the energy equation, but so far they haven't seriously considered any potentially positive approach to maintaining the world's standard of living while reducing the world's dependence on nonrenewable resources.

There's a great deal that individuals can do that may not save the world, but will preserve their lifestyle and bank accounts. The energy crisis is a catalyst for severe price increases for anything from items produced with electricity to items moved to market by trucks.

Oil experts predict that the gas price should hit $4/gal by this summer and will probably be $6/gal within the next two years. This means that a fill-up for many middle class drivers will run between $100-$150. The solution is drive less. Here are a few ways to do it. A. Carpool to work. If you share a ride with three neighbors, you will cut your gas costs by 75%. B. Mass transit has all the economic ills of any government run service. If you can easily use mass transit, it will save you about 75% of your gas costs. C. Walking is healthy exercise and bikes are good transportation. If you live in an area where you are unlikely to become road kill, walking and biking will save you tons of money. D. In World War II, the Government promoted victory gardens; today they should be recommending survival gardens. Produce is perishable and is transported to market by trucks. If everyone in suburban and rural areas grew their own vegetables, there would be less use of diesel. E. If you have a job that allows you to telecommute do it. F. Take vacations closer to home. Cross-country road trips are budget busters for many families. G. Find a job closer to where you live or move closer to where you work.

This short list should get you thinking. Your goal should be to cut your driving by 50% and thus double the time between those $100+ fill-ups.

Your electric utility bill is expected to rise by about 10%/year. This means that in seven years, your electric bill will double. Here are some things you can do to cut your demand for electricity. A. Use as little electricity as possible from May to October between the hours of Noon to 6 PM. This is peak demand time, due to air conditioner use and the electric utility charges their maximum rate. B. Replace your high wattage lights with low wattage energy saving lights. You'll get as much light and you'll save a bundle of money. C. Consider going to solar power. The Government offers tax incentives and grants that cover about one-third of the costs. D. Encourage your local politicians to increase solar incentives and convert public buildings to solar. It would greatly reduce hydrocarbon demand and lessen buying pressure on the price of oil, gas and coal.

If it sounds like I'm advising you to prepare for war, it's because we are in a war to survive and maintain our lifestyle. Energy is only the first recognized battle in a war for Civilization's survival. If you do nothing, your family will have nothing in a couple of decades.

The Governments focus on the War on Terror is a terrible waste of hundreds of billions of dollars for nothing. It's sad that 2,752 innocent people lost their lives on 9/11. Yet, cars kill an average of 3,335 every month. Our response is woefully out of balance with the reality of the 21st Century.

If you can see our 21st Century reality, you should visit the Global Village Investment Club Website.  We offer a global solution to what appears to us to be a very dark future.

William Cate is the Managing Director of Beowulf Investments. He's the Executive Director of the Global Village Investment Club. He's also a Venture Capital & Equity Finance Consultant.