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We are at a cross roads in human history, we can choose to continue on as we have been, or we can make a change to improve our future and quite possibly the future for several generations to come. We are here to promote energy independence, a better environment, a secure future and a higher return on investment for your hard earned dollar. It is what I believe in, it is why I am in the solar business.

A false sense of security

19 Nov 08 | Conservation, Environment

I continue to watch in amazement as fuel oil prices (and energy prices in general) plumet from there summer time record highs.  Home heating oil has decreased by nearly 38%, from $4.80/gallon to the current price of $3.018/gallon.

The reason given on most news channels is the demand dropping off due to the bad economy.  Maybe, but I have another theory.  Demand is off by roughtly 5.2% over the same period last year.  The price per barrel of oil has dropped from a high of $147/bbl to about $56/bbl today, or a decrease of 62%.

Something doesn’t quite add up here.  Perhaps it has something to do with the less than transparent oil hedge fund speculation.  In fact, the hedge funds came to light last summer, when congress considered banning the practice, but choose not to.  So what is a hedge fund?

That is an investment that is betting on the price of some comodity will go up.  The idea is to buy low, sell high.  With oil, that was a pretty safe bet until recently.  Some hedge funds completely collapsed, leaving investors holding the bag.

As oil prices began to fall toward the middle of July, these funds began to dump there crude holdings, thus, the market became very soft for crude which lead to the price collapse.  So, was the the end of high oil/gas prices?

No, most experts agree that oil prices will go back up, even before the economy begins to recover.  Indeed, OPEC has already cut production once to prop up prices.  That effort was ineffective, so no doubt they will try again at their next meeting.

In the grand scheme of life, spending money, especially large amounts of hard earned cash, is always somewhat difficult.  The exact perfect time to invest in a renewable energy system may never arrive.  After all, there are many other things to spend money on, a new car, a new bathroom or kitchen, that trip the the Bahamas that you always wanted to take.  However, wouldn’t it be nice to know that you are not being manipulated out of your money by wealthy hedge fund operators?  Wouldn’t it be nice to know that you are not dependent on buying oil from people who don’t like us?  Wouldn’t it be nice to know that you have lessend your impact on the environment, even if it did cost a little more in the short run?

In the coming months, we may be called upon to sacrifice for the good of our country.  The time has never been better to install a renewable energy system, what better way to support the local economy, create jobs, reduce imports, reduce the trade deficite, improve the environment and take back control of your life.

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19 Nov 08 | Conservation, Environment
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Reader's Comments

  1. ways to use solar energy | Digg hot tags | November 19th, 2008 at 6:00 pm

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  4. Todd | November 28th, 2008 at 12:05 pm

    Well said Paul…it never had much to do with demand…once again the media and wall street did a great job convincing gullible citizens that the sky was falling. However, I think it was a great wake up call for all of us to finally divorce ourselves of oil!

  5. CFE | December 1st, 2008 at 5:53 am

    Because oil demand is very inelastic, prices are extremely volatile. A small decrease in demand or increase in production can lead to dramatically lower prices, or vice versa.

    Including the cost of externalities in the price of oil would make a big difference. The head of IPCC reckons that a $25 per barrel tax on oil would cover it. That would send a message that oil will always be expensive, thus reducing demand long term.



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