As gasoline prices plunge to near record lows, only a few months after reaching record highs above $4 a gallon, an unintended casualty regrettably may be the nascent enthusiasm for alternative and renewable energy.
“This time,” we thought last summer, “we finally will do something about all those petro-dollars being exported to mostly unfriendly foreign nations.” An estimated $700 billion is exported a year, according to T. Boone Pickens.
And just in time, we were told, as knowledgeable experts, including Pickens, warned of the peak oil reality of global demand outstripping diminishing supply.
“Drill, baby, drill” went the mantra as irate drivers and a threatened economy prompted Congress and the president to lift an 18-year ban on offshore drilling, despite a guess of 10 years before new offshore oil would reach gas pumps.
Only 10 weeks for oil prices to plunge $100 a barrel once speculative excesses evaporated and consumer habits changed.
Nothing could be better economically, at least that’s true for stressed consumers in a driving-dependent, suburban-sprawled community like Oklahoma City, one of the nation’s largest by land area. For a back-of-the-envelope estimate, a $2 per gallon decline in gasoline prices effectively puts $1.5 billion back into Central Oklahoma pockets in a year, which is far more fiscal stimulus for our region than the $600 checks mailed out by the treasury.
But there’s always a cloud surrounding the silver lining. The collapse of energy prices is maybe not so good for Oklahoma’s oil and natural gas companies, lease holders and royalty recipients. It’s also not great for a state budget that hopes for 2009 average oil prices of well above where they are now.
Pickens has said oil will head back over $100 per barrel, taking gasoline skyward with it. He’s been right more times than wrong, so our economic respite may be brief, depending on how permanent our changed driving habits become.
Therein lies the dilemma. When oil was above $100 per barrel (on its way to $200), alternative and renewable energy were finally gaining traction as profit-making and job-creating opportunities.
Gov. Brad Henry recently became the 30th governor to endorse 25x’25, a movement to obtain a quarter of our energy needs from renewable sources by 2025, up from just 10 percent today. In Oklahoma alone, renewable energy could create more than 100,000 jobs and an economic impact greater than $13 billion, according to 25x’25 officials.
And T. Boone has a well-conceived blueprint to dot the wind corridor, a good portion of which is located in western Oklahoma, with giant turbines swooshing their way toward energy independence.
He has a strong ally in Aubrey McClendon of Chesapeake Energy, who also wants to substitute wind energy for the natural gas now used to produce 20 percent of the nation’s electricity and divert that natural gas to our cars and trucks.
For the time being, however, with $50 oil and $1.65 gasoline, our interest in 25x’25 may be fading and the Pickens Plan may be gone with the wind. At least, until the next time oil prices spike and we find ourselves wishing we’d had some foresight and commitment to achieving national energy autonomy.
Hazelton is an economist living in northwest Oklahoma City.