WASHINGTON — High oil prices are fueling
one of the biggest transfers of wealth in history. Oil consumers are
paying $4 billion to $5 billion more for crude oil every day than they
did just five years ago, pumping more than $2 trillion into the coffers
of oil companies and oil-producing nations this year alone.
The consequences are evident in minds and mortar
worldwide: anger at fuel pumps in China and inflated confidence in the
Kremlin, new weapons in Chad and new petrochemical plants in Saudi
Arabia, no-driving campaigns in South Korea and bigger sales for Toyota
hybrid cars, a fiscal burden in Senegal and a bonanza in Brazil.
Myanmar's recent demonstrations were triggered by a government decision
to raise fuel prices.
U.S. pays heavy price
In the
U.S., the rising bill for imported petroleum lowers already anemic
consumer-savings rates, adds to inflation, worsens the trade deficit,
undermines the dollar and makes it more difficult for the Federal
Reserve to balance its competing goals of fighting inflation and
sustaining growth.
High prices have given a boost to oil-rich Alaska, which
in September raised the annual oil dividend paid to every man, woman
and child living there for a year to $1,654. In other states, high
prices create greater incentives for pursuing non- oil energy projects
that once might have looked too expensive and hurt earnings at
energyintensive companies like airlines. Even Kellogg's cited energy
costs as a drag on earnings.
With crude-oil prices flirting with $100 a barrel, there
is no end in sight to the redistribution of more than 1 percent of the
world's gross domestic product. This new high point in petroleum prices
has arrived over four years, and many believe it will represent a new
plateau, even if prices drop back somewhat in the coming months.
"There's never been anything like this on a sustained
basis the way we've seen the last couple of years," said Kenneth
Rogoff, a Harvard University economics professor and former chief
economist at the International Monetary Fund. Oil prices "are not
spiking; they're just rising," he said.
Exporters reap riches
The
benefits, to the tune of $700 billion a year, are flowing to the
world's oil-exporting countries. Two of those nations - Iran and
Venezuela - may be better able to defy the Bush administration because
of swelling oil revenues.
Venezuela has used its oil wealth to dispense patronage
around South America. And Iran could be less vulnerable to sanctions
against its nuclear program.
The world's biggest oil exporter, Saudi Arabia, is using its rejuvenated oil riches to build four cities
and has a budget surplus.
Russia, the world's No. 2 oil exporter, has increased its federal budget tenfold since 1999 while paying off foreign debt.
It's getting a lot easier to buy a hybrid -- but not necessarily cheaper.
Amid heightening concerns over America's proclaimed
oil addiction, skyrocketing fuel prices and global climate change, auto
companies are making more gasoline-electric hybrid cars and giving
consumers more choices than ever before.
But marketplace dynamics in the U.S. -- including higher prices charged
by the car companies, dwindling tax credits given to fuel-efficient
cars and low gasoline taxes -- haven't yet allowed a hybrid or other
more-efficient vehicle to become an economical choice for many
consumers.
In Europe, by contrast, several countries offer
significant tax breaks to people who buy more-efficient vehicles. And
high fuel taxes also are propelling Europeans to invest in a
more-efficient ride.
Mild or Full
There are several hybrids on the market now, using
different technologies. But basically, a hybrid consists of a
traditional internal-combustion engine paired with an electric motor.
The electric motor gets its power from a storage battery, which is
replenished by a recharging system within the car's powertrain.
Electric motors boost power to the gas engine, allowing manufacturers
to install smaller -- and thus more-efficient -- motors in these cars.
Most hybrids sport four-cylinder engines as opposed to the six- or
eight-cylinder motors found in many vehicles.
There are essentially two types of hybrids on the mass
market today, often dubbed "mild" or "full" hybrids, each with
fuel-sipping and emission-curbing features. A mild hybrid shuts off the
engine at a full stop; uses regenerative braking, which utilizes
dissipated energy from braking to recharge the battery; and uses the
electric motor to help power the gas engine.
General Motors Corp. wants to make
Chevrolet, its largest brand, an environmental leader as the U.S.
automaker invests in fuel-saving systems in a challenge to Toyota Motor
Corp.
GM will use hybrids, fuel cells, more efficient gasoline
engines and other technologies to vie for mileage and environmental
bragging rights against competitors such as Toyota, vice chairman Bob
Lutz told reporters last week in Memphis, Tenn.
"There is no environmental technology that will be
untouched by Chevrolet," said Lutz, who was introducing a redesigned
Malibu sedan. Details of the effort will be announced at the Los
Angeles Auto Show next week, he said.
The Chevrolet initiative follows chief executive Rick
Wagoner's pledge at last year's Los Angeles show that the Detroit-based
automaker would use some of the billions saved by closing plants and
cutting labor costs to pay for new technology and narrow an
environmental image gap with Toyota. GM is trying to hold off the
company and maintain its rank as the world's largest automaker.
GM on July 5 started a Fuel Solutions advertising
campaign that uses the slogan "gas- friendly to gas-free" and was
created by Interpublic Group of Cos.' Campbell Ewald unit.
"This campaign has been really quite effective," said
Wes Brown, an analyst at Los Angeles-based market researcher Iceology
Inc. "They have been able to convince people that they are trying to
change their image, and people are paying attention."
GM, with the Chevrolet Volt car, is racing against
Toyota to develop the first hybrid model that recharges at an
electrical outlet. GM has also begun rolling out 100 prototype Chevy
Equinox sport utility vehicles powered by hydrogen fuel cells.
Chevrolet vehicles such as the Silverado large pickup
truck and Corvette sports car already lead their segments in fuel
economy, GM spokesman Terry Rhadigan said.
Chevrolet is inviting reporters to
drive its models next month in San Diego as part of the Fuel Solutions campaign.
That
includes a gasoline-electric Tahoe SUV; the Aveo car, GM's most
fuel-efficient model at 34 miles per gallon in highway driving; an
Impala sedan that uses 85 percent ethanol fuel; and prototypes of the
fuel-cell Equinox and the Volt electric car.
A small - but growing - group of experts think world oil production will peak in the next few years, to devastating effect.
By
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
, CNNMoney.com staff writer
September 14 2007: 2:50 PM EDT
NEW
YORK (CNNMoney.com) -- At some point in the near future, worldwide oil
production will peak, then decline rapidly, causing depression-like
conditions or even the starvation of billions across the globe.
That's
the worst-case scenario for subscribers to the "peak oil" theory, who
generally believe oil production has either topped out or will do so in
the next couple of years.
What
follows depends on who one talks to, but predictions run the gamut from
the disaster scenario described above to merely oil prices in the
$200-a-barrel range while society transitions to other energy sources.
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The end of oil
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September 14 2007: ...
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