Gal Luft, an advisor to Fuel Freedom’s board, doesn’t know if or when oil prices might start rising again. For all the predictions out there lately, few experts can say for certain what the market will do in 2015.
“I started working on this when oil was $20 a barrel,” he says, referring to an era roughly between the mid-1980s and late ’90s when oil was at that threshold or even below it.
“I don’t think that we should aim to bring the price of oil to any specific place, because sometimes the price will be high, and sometimes the price will be low,” he adds. “That’s what commodities do: They fluctuate. It’s true for oil, it’s true for cocoa, it’s true for soybeans.
“And I think the question is not, ‘How high is oil or how low it is.’ The question is, ‘Why is oil the only commodity in the transportation sector?’ … The issue should not be to look for a sweet spot for oil or a certain target price for it, but to talk about the lack of competition and the lack of choices and the need to diversify our sources of supply in the currently monopolized market.”
Luft is an expert on international energy issues. He’s co-director of the Institute for the Analysis of Global Security and senior adviser to the United States Energy Security Council, and he writes frequently about such issues.
His latest opinion piece, published this week on the Journal of Energy Security website, is titled “Don’t Get Used to Cheap Oil.” He expresses concern that the “growing exuberance” brought about by plunging oil prices could “diminish public appetite” for energy policies that would reduce the nation’s dependence on oil as a transportation fuel.
There are so many potential factors in oil’s sudden drop — 45 percent over the last six months — that it could easily rise again.
Just like a combination of circumstances – a stronger dollar, increased supply from the U.S. and Libya, and tapering demand in the developed world – have brought to the recent price drop, a different set of drivers can lead to the exact opposite outcome. A cut in OPEC production, trouble in one or more major oil exporting countries, or a slowdown in North American production due to lower prices could reverse the recent trend, sending oil prices back to the three digit level. Predicting future prices is a loser’s game but even optimists would concur that any one of these three scenarios has a good chance of materializing in the foreseeable future.
To protect ourselves against wild price swings, consumers need alternatives to gasoline as a transportation fuel.
This way, if oil returns to unfriendly territory consumers will be able to shift to cheaper fuels and hence drag the price back to equilibrium. … The abundance of choice enabling vehicles would give rise to choice in fuels and this would be the only possible insurance policy Washington can provide the American people for the next time the oil market flips.