Coherent alternative energy solution to oil desperately needed

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Coherent alternative energy solution to oil desperately needed

Posted On : Aug-22-2010 | seen (556) times | Article Word Count : 719 |

Alternative energy solutions needed for economic recovery to be lasting

As oil sells for around $80 per barrel range and the unstable global economy fights to rebound from the existing slump, the need to invest in alternative energy and establish viable alternatives to oil as a source for fuel becomes even more vital. Why? Historically, when the cost of oil reaches a certain percentage of GDP, an economic downturn takes place. In today's economy that figure is about $80 per barrel.

If analysts are correct, that would mean the global economy may be teetering on the threshold of another down leg, if not a financial collapses, should oil increase in price appreciably higher than $80 per barrel.

If we are in a recession, why is oil trading at about $80 per barrel anyway? Is the world running out? No, the world is not running out of oil, however there are other challenges such as the price to bring oil to market.

Case in point: For oil producers to earn a reasonable return on their oil production, the price of oil needs to be in the $60 to $70 a barrel. If it drops below some $60, drilling and research experience a dramatic decline with a corresponding fall off in output, putting future demand at risk.

Many investors believe that offshore oil from countries like Brazil that have major untapped reserves is the answer. What is not understood is that the break even price to get the oil from these sources that are up to 7 miles deep is about $80 per barrel. And then we ask have to ask ourselves: Is deep sea oil even prudent after the BP oil spill tragedy?
Let’s take a look at the initial stage of the current recession which started about January 2008. Note that at that time, oil went over $100 per barrel and stayed there for about the next 2 quarters. During the initial months, the effect on the economy was clear to many observers. The government denied we were in a downturn, but the general public was conscious enough to recognize that the economy was in less than healthy condition.

Then, the recession that was not a recession, was eventually affirmed to be in one a few weeks after the bankruptcy of Lehman Brothers in September of 2008. From there the recession morphed into the most severe economic downturn since the Great Depression. Now the recession that wasn’t a recession is going through a recovery that is not really a recovery which is obvious because of high unemployment and real estate foreclosure levels.

So what would it take to cause a spike in energy to over the $100 range placing the economy at risk? How about a geopolitical event in the Middle East? Or a terrorist attack on a major oil producers facilities? How about an attack on commercial vessels in the Straits of Hormuz where 20% of the global oil transits daily If you think that one of those scenarios is far fetched, simply turn on the news and listen to the current events in the Middle East. It looks like we are on the brink of war.

A geopolitical event or terrorist attack notwithstanding, extra oil demand from the growth of emerging economies could easily drive oil prices in excess of $100 per barrel inside of the next year or two. The higher oil prices go, the more vital a logical alternative energy system on a domestic and global dimension would be required.
It’s easy to surf the web and find out about advances in offshore wind power, solar power and hydrogen fuel cell technology. The recent developments in electric / hybrid autos are impressive as well. While significant advancement is happening in these areas, it is not anywhere near fast enough to ease concerns of the current rate of rising oil costs.

The bottom lines is this: If an alternative fuel source, at least on a back up level, is not identified in the near future, then the increase in oil prices which are under way hopefully wont take this recovery which isn’t a recovery and turn it into a depression that IS a depression.

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<h1>Coherent alternative energy solution to oil desperately needed</h1> Author: <a href='http://www.articleseen.com/profile_Hank Jensen.aspx'>Hank Jensen</a> As oil sells for around $80 per barrel range and the unstable global economy fights to rebound from the existing slump, the need to invest in alternative energy and establish viable alternatives to oil as a source for fuel becomes even more vital. Why? Historically, when the cost of oil reaches a certain percentage of GDP, an economic downturn takes place. In today's economy that figure is about $80 per barrel.

If   analysts are correct, that would mean the global economy may be teetering on the threshold of another down leg, if not a financial collapses, should oil increase in price appreciably higher than $80 per barrel.

If we are in a recession, why is oil trading at about $80 per barrel anyway? Is the world running out? No, the world is not running out of oil, however there are other challenges such as the price to bring oil to market.

Case in point: For oil producers to earn a reasonable return on their oil production, the price of oil needs to be in the $60 to $70 a barrel.  If it drops below some $60, drilling and research experience a dramatic decline with a corresponding fall off in output, putting future demand at risk.

Many investors believe that offshore oil from countries like Brazil that have major untapped reserves is the answer.  What is not understood is that the break even price to get the oil from these sources that are up to 7 miles deep is about $80 per barrel.  And then we ask have to ask ourselves:  Is deep sea oil even prudent after the BP oil spill tragedy?
Let’s take a look at the initial stage of the current recession which started about January 2008. Note that at that time, oil went over $100 per barrel and stayed there for about the next 2 quarters.  During the initial months, the effect on the economy was clear to many observers.  The government denied we were in a downturn, but the general public was conscious enough to recognize that the economy was in less than healthy condition.

Then, the recession that was not a recession, was eventually affirmed to be in one a few weeks after the bankruptcy of Lehman Brothers in September of 2008.  From there the recession morphed into the most severe economic downturn since the Great Depression. Now the recession that wasn’t a recession is going through a recovery that is not really a recovery which is obvious because of high unemployment and real estate foreclosure levels.

So what would it take to cause a spike in energy to over the $100 range placing the economy at risk? How about a geopolitical event in the Middle East? Or a terrorist attack on a major oil producers facilities? How about an attack on commercial vessels in the Straits of Hormuz where 20% of the global oil transits daily  If you think that one of those scenarios is far fetched, simply turn on the news and listen to the current events in the Middle  East. It looks like we are on the brink of war.

A geopolitical event or terrorist attack notwithstanding, extra oil demand from the growth of emerging economies could easily drive oil prices in excess of $100 per barrel inside of the next year or two.  The higher oil prices go, the more vital a logical alternative energy system on a domestic and global dimension would be required.
It’s easy to surf the web and find out about advances in offshore wind power, solar power and hydrogen fuel cell technology. The recent developments in electric / hybrid autos are impressive as well.  While significant advancement is happening in these areas, it is not anywhere near fast enough to ease concerns of the current rate of rising oil costs.

The bottom lines is this: If an alternative fuel source, at least on a back up level, is not identified in the near future, then the increase in oil prices which are under way hopefully wont take this recovery which isn’t a recovery and turn it into a depression that IS a depression.

About the Author: Hank Jensen&nbsp; is 
a contributing editor for <a rel="nofollow" href="http://www.tn-labs.com/">Alternative Energy Talk</a>. Visit his blog to read about 
<a rel="nofollow" href="http://www.tn-labs.com/">onsite energy systems,</a> and 
<a rel="nofollow" href="http://www.tn-labs.com/">hydrogen power company's</a>
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Article Source : http://www.articleseen.com/Article_Coherent alternative energy solution to oil desperately needed_30255.aspx

Author Resource :

Hank Jensen is
a contributing editor for Alternative Energy Talk. Visit his blog to read about
onsite energy systems, and
hydrogen power company's

Keywords : alternative energy, onsite energy system, , hydrogen power company, renewable energy, ,

Category : Reference and Education : Environmental

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