Advancing the Red, White & Blue!
by
Commissioner Tommy Adkisson
July 27, 2007

According to Daniel Yergin's Pulitzer Prize-winning book entitled The Prize, toward the end of World War II, "On a night journey to the struggling remnants of Germany's Tenth Army in Italy, Albert Speer had seen before him a clear vision of one of the primary reasons why the Reich that was to last for a thousand years had, in fact, only weeks to go. For on that trip, he had encountered 150 German Army trucks. To each were hitched four oxen, which were dragging the trucks forward. It was the only way the vehicles could move. They had no fuel."

Earlier this week, the price of Brent Crude oil, which at least for now seems to be the world standard, got within 25 cents of breaking the all-time record of $78.65 a barrel set last summer when the Middle East appeared to be coming unglued.

John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. said, "The unrelenting pressure of increased demand has left the market a coiled spring." New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise.

Oil prices could triple in three months to more than $200 a barrel, given the right circumstances, according to the well-known energy expert, Matthew Simmons, chairman of Simmons & Co., a Houston investment bank.

"Oil is still cheap," Simmons said. "In the 20th century, with a few exceptions, oil was almost free. The only exceptions were during 1973, 1979 and when Iraq invaded Kuwait."

Prices rose in 1974 after an oil embargo that followed the Arab-Israeli war and from 1979 through 1981 after Iran cut oil exports.

"Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production," he said in an interview.

The Organization of Petroleum Exporting Countries is scheduled to next meet in September. No members have called for a gathering before then. Accelerating Demand

The failure of near-record fuel prices to restrain global oil demand growth is what concerns Rubin, chief strategist at the brokerage unit of Canadian Imperial Bank of Commerce in Toronto.

Outside the U.S., demand increases are being led by India and China, where growing economies mean more cars and trucks and more factories that burn oil and gas.

The cost of finding and pumping oil is rising steadily, convincing analysts such as Rubin and Deutsche Bank AG chief energy economist Adam Sieminski that higher prices will last. Shortages of deepwater drilling ships and rigs has pushed daily rents to records, and the skilled workers needed to run rigs, weld pipes, pilot vessels, fix refineries and build oil-sands projects command ever-higher wages.

Supply is down a million barrels a day, demand is up a million barrels a day. The market is in a deficit.

So what are we to do?

  1. Improve fuel economy.
  2. Ramp up spending on alternative fuels.
  3. Redouble our commitment to efficiency.
  4. Get serious about solar and wind.

Bexar County is implementing every conceivable way to economize on our energy use!

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