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Where is the price of Oil and Gas driving us?

Ghazal Omid - 12/2/2005

There are many ways to look at what some experts call a “crisis.” As a member of an Iranian whose family worked in one of the oldest and largest refineries in the Middle East, I have a different view about the price of oil and gas. First, I believe that to resolve any problem one must not only look realistically at the scientific data but also be open-minded by analyzing the facts and acknowledging there is a problem before jumping to a conclusion. Yes, the prices at the pump are higher than years ago and, yes, we will see even higher prices in the future but that doesn’t mean the oil and gas reserves are going to dry up in the next five months or five years as some alarmists predict. They may be scarce but not dry. This rumor, however, has helped cartels highjack their prices, even in the disaster zones of Hurricane Katrina.

According to many researchers, when the oil from other sources is depleted, countries such as Saudi Arabia and Iran, which hold the largest reserves, will have the last word. The hardest part of today’s oil crisis is not the price at the pump but tomorrow’s energy crisis which will involve hearing the Saudi and Iranian governments demands; a debacle no American, or anyone who uses oil, should wish to happen. As we all know, these countries will use their resources to demand what they want and a country in need, even as great as America, may have to bow and kiss these countries behinds. This, I believe, will not leave much maneuvering room for the American government, despite its repeated declaration, “We do not negotiate with terrorists.” As a Persian proverb says, “When a nation is in need, anything goes.”

We live in a world largely dependent on oil. What is the solution to this problem? Either the oil crisis will force us to take a leap into the next century and conserve energy by using alternative methods, new not only to our fathers, but also to human kind. We will be a new generation of pioneers. Or, for the sake of argument, it may force us back to where we were a century ago; giving up some of the luxuries to which we are accustomed.

As strange as it may sound, some young couples are already trying methods that sound right out of wilderness movies. According to recent statistics, the wood business is booming. Wood fireplaces are becoming more popular and many people are ordering wood burning stoves, which are banned by some governments and restricted to limited use in many areas.

We need to consider that no matter how much we believe solar energy and other environmental friendly resources are the preferred type of energy, not everyone can afford or knows how to build solar panels or solar cars. So, while the idea of solar everything may be feasible for the next century, right now, it is no more than wishful thinking or a far fetched dream to replace the “good old” diesels. I don’t mean to sound as though I am against solar energy; on the contrary. But, when solar energy costs as much as the house and looks so alien to so many people, it might as well remain part of the space program.

My point is, solar energy cells must be advertised and used more widely before they will become a national phenomena and affordable for the average family to use on their roof and in their daily lives. As it is, the companies involved in making these energy cells either want to keep production at a limited level, by which demand causes prices to be higher than they should be or they have a very bad marketing team.

Second, we need to recognize that people expect a certain level of ease, manageability, reliability, comfort, and luxury for the oil they use. Therefore, the idea of fitting people into smaller, smarter hybrid cars that carry one or two people may be a very hard sell to many consumers. In particular, the manufacturers seem to ignore the fact that nearly 50 percent of young Americans are above average size, struggling with weight issues, and an alarming number are considered obese. Although it is hard for them to get around, thanks to large cars it is less embarrassing. However, the miniature cars coming on the market can’t carry their weight, adding insult to injury. For hybrid or hydrogen cars to replace traditional cars, they must be safe, user friendly, size sensitive, economical, priced at the same level as current cars and offer the same or more comfort.

To make smart hybrid cars popular, manufactures must be sensitive to consumer wishes. Some of the toy cars the manufactures are advertising as an alternative are nothing but a waste of time and a joke. Some carry only two passengers and one- passenger cars, coming out of cartoon character sketches, are on the way. A toy car may be cute in the parking lot or fun for rich teenagers to drive around and show off as their latest gadget, but they will not be on everyone’s car list for 2006. In fact, they destroy the message that hybrid cars are practical. The message should be “The hybrid is not a toy or fashion statement, but a necessity.”

Third, making matters worse, while the marketing of these cars often emphasizes that they are for the city only, young buyers are being told by dealers that they are suitable for general highway use. The worst mistake for car manufactures to make is to trick people into buying something and then try to live up to their claim. Someone needs to step up and tell them that the younger drivers are only going to hear the part they want to believe. In many cases, young adults buy the car just because they perceive it as “cool.” I have driven behind these two-passenger smart cars on the highway and nothing is more frightening than having one turn into your lane in front of you while everyone is driving 90 kilometers per hour and these cars can’t run more than 50 kilometers per hour. They are not built for the highways. They endanger not only themselves but also the drivers trying to pass them. Driving behind one of these cars, as cute as they are in the parking lot, is a frustrating nightmare. So much so, that I treasure my gas guzzling SUV as a hero from gladiator times, carrying me safely in his arms to the safety of the next lane without being hit by a more powerful car. Glancing into my rearview mirror, I was not angry with the person driving the toy. I felt sorry for him but I was angry with the manufacturer who sold it to him. Consumers may look naïve, but they are not as stupid as manufactures like to think. We can draw our own conclusions of the advertisements. Unfortunately for the manufactures, they don’t want to admit that it is a lot harder to turn an angry customer into a repeat buyer than it was to sell him the first time. What we need is less talk and more action.

Hybrid sedans don't do much better than the two passenger cars. Manufacturers promised that the new generation of hybrids would be compatible with older cars. Most users, however, find themselves using the gasoline system more in highway driving because the electric motor does not have enough power to keep up with traffic.

Fourth, for these cars to stand the test of time, they must offer something the old cars don’t. I guess the question is, besides the pump price differences, what else are they offering?

Obviously safety has always been number one on the consumer’s mind. Are there more practical safety gadgets in these cars? Current prices and waiting lists for the hybrid cars are not making these cars any more attractive. When can the consumer expect a drop in prices? If these cars are going to cost so much, we might as well just stick with our old gas burning dinosaurs. The 40 dollars extra at the pump hurts but not as much as the thousands of dollars at the dealership.

This may be an old time trick from the “Genie in the Bottle” marketing team but incentives drive people. Here are a few suggestions from a consumer that might be helpful:

The manufacturers often say they need more funding for research and help. Why don’t the manufacturers share the dream of future cars with jillionaire investors and get them to work on the development, hopefully speeding the process. After all, many are buying land on Mars to leave a legacy. Hybrid and hydrogen cars are here on earth and a lot more achievable than farming on Mars.

When the manufactures start working directly with the government on a deadline, they may be more tuned into this dream than doing the research voluntarily. If the government agrees, maybe they can come up with a program for people returning their old car to receive tax deductions and bonuses to buy the new hybrid cars, not for six months or certain models but unlimited from now till, say, year 2020; one bonus package per family or, if possible, for every car returned? It may be a leap but we all need to leap sometime in our lives if we want to achieve big dreams. Human achievements would have been impossible had they not been tried; based on a little bit of faith, calculated risk and a whole lot of guts to actually do it.

If the government wants to see all gasoline cars off the market by a certain year, they need to turn that date into a law. That gives every state the legal muscle that would make it difficult for people to keep their old cars. No matter how much they love them, they won’t be able to drive them. I am sure it will not come to this but if they refuse, their plates and driver’s licenses should be confiscated. As soon as people see five to ten dollars per liter prices at the pump they will line up for the new cars. There will always be a few diehards that want to keep the old fashioned life and keeping them in line is not such a bad idea to make this transition as smooth as possible.

Lastly, when and if the whole nation agrees and brings this dream of hybrid and solar energy to reality, it may be a great thing for a nation, for the environment, possibly reduce the risk of large hurricanes and save money on coastal repairs necessitated by global warming by reducing the toxic gases we release to the air we breathe day in and day out. Our pocketbook may also thank us, but we need to remember that not every nation has the capacity or is willing to put up with such restrictions. Therefore, one country going hybrid, may not help much to save the environment or oil resources until it becomes an international law and industrial countries help other countries that are not capable of achieving this dream alone. We may not be particularly fond of those nations but we need to remember that we all live on one planet; their problems are our problems. Only then we will be proud of our achievements as our names go down in history as pioneers. Lets make sure it goes down as “good deed doers”, not as negative skeptics.