While the world is playing politics, the average person may not be able to turn on the lights in their own homes in the future. Energy is becoming increasingly expensive. Brent Crude just passed $93.70 while West Texas crude just passed $90.16. The average price of a gallon of gas is $3.85. With energy prices soaring the average person is struggling to afford it. In the United States, president Joe Biden just canceled all leases to drill on Alaskan reserved land. Climate activists say it’s a win, but at what cost?
We can no longer deny the existence of climate change (finally). We must not ignore the fact that humans do have an impact on climate. But at this very moment in time, we have to put climate to the side and fix our economics. If inflation continues at this rate, nobody will be able to afford to buy a home, yet alone live in one. Basic commodities will become too expensive and our currencies will become useless. Now most people equate inflation to printing money. Which is obviously a large factor. But we all tend to forget that oil is another.
The United States dollar is pegged to crude and Saudi Oil. When oil is expensive, the dollar becomes inflated. Gasoline also powers ships, planes, cars, manufacturing plants and more. If oil prices rise, then gasoline prices rise, which then plane ticket prices rise, and goods rise….. I think you can see where I am going with this one. Oil prices are an important factor in driving inflation down. With OPEC holding the world’s oil hostage, governments like the United States, who sit on large oil reserves need to dig for oil.
The United States sits on over $1 trillion worth of oil. The Alaskan oil reserve is estimated to be able to generate over 11 billion barrels. The ability to rely on energy independence and not rely solely on OPEC will decrease inflation and create a new market. Canada, China and Norway are other countries that produce crude at extremely high levels. The energy independence for all those countries can drastically fix economies, put pressure on OPEC to produce more crude and lower inflation and prices.
There is also a great flipside to this coin. Although in the short run the world may be damaging our climate, we can use the funds gained from crude oil to invest in green energy. A re-investment strategy into mass solar production, hydroelectricity, nuclear energy and wind farms will be crucial in the fight against climate change. It is going to take tens of billions of dollars to create climate friendly infrastructure, and no better way than to get those funds from our crude productions. It may not be the solution we like, but it’s the best and quickest solution we have to solve our energy crisis and climate change.
Author: Joshua Cheatham
