Analysis: The facts on fuel

A need exists for a fresh understanding of the workings underlying it.

By ORRI AVRAHAM
November 18, 2007 21:42
4 minute read.
Analysis: The facts on fuel

fuel 63. (photo credit: )

 
X

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before. Nevertheless, traditional business models are no longer sustainable and high-quality publications, like ours, are being forced to look for new ways to keep going. Unlike many other news organizations, we have not put up a paywall. We want to keep our journalism open and accessible and be able to keep providing you with news and analysis from the frontlines of Israel, the Middle East and the Jewish World.

As one of our loyal readers, we ask you to be our partner.

For $5 a month you will receive access to the following:

  • A user experience almost completely free of ads
  • Access to our Premium Section
  • Content from the award-winning Jerusalem Report and our monthly magazine to learn Hebrew - Ivrit
  • A brand new ePaper featuring the daily newspaper as it appears in print in Israel

Help us grow and continue telling Israel’s story to the world.

Thank you,

Ronit Hasin-Hochman, CEO, Jerusalem Post Group
Yaakov Katz, Editor-in-Chief

UPGRADE YOUR JPOST EXPERIENCE FOR 5$ PER MONTH Show me later

The imminent crisis that petroleum holds for the global economy has long been the preoccupation of economists around the world and in the west especially. Now in particular, with prices of crude oil threatening to breach $100 a barrel, the question marks raised by this troubling trend have become impossible to ignore. Perhaps even more urgent than the crisis itself is the need for a fresh understanding of the workings underlying it. Dr. Amit Mor, CEO of the Eco Energy investment firm in Israel, is an acknowledged expert in the field of environmental economics, and many movers and shakers turn to him for advice and analysis of the industry. Mor offers an explanation for both the recent spike in oil prices and the overarching direction the market has taken in recent years. "The extreme weather in Mexico and attacks led by rebel groups in Nigeria over the past few days together caused a temporary disturbance in oil production and are responsible in large part [for the recent price increase]," Mor asserts. "Beyond that, lately there has been a lot of anxiety in the market as a result of tensions with Iran and the fear that UN sanctions would provoke the regime to intentionally limit its production." The spike, Mor points out, is also connected to the depreciation of the dollar over the past few months. "Speculators are losing money directly as a result of the declining value of the dollar and are bringing prices up just to cover for that loss," he says. "The bigger picture involves mainly China, India and the United States, where demand for oil is rising very rapidly. In China, the annual growth in demand is over 10 percent, and this has been consistently driving prices up in recent years." When asked what future he foresees for the market, Dr. Mor expresses a mix of caution and mild optimism. "In the short term, it's very difficult to say where prices are heading. This winter might be hard in Central America, or the unrest in Nigeria could continue... or a whole host of other problems could disrupt production, and prices might very well go above $100 a barrel," he says. However, he continues, "I think prices will go down and settle at around $50-60 a barrel. Prices can't remain at $100 for very long. Pretty soon, the pressure will force greater fuel efficiency in transportation and a decrease in the global growth rate of oil consumption... [while] the incentive to drill new sources will increase supply and also bring down prices significantly." While Dr. Mor expects the consumption of oil to drop significantly over the years, in the world he envisions three decades into the future, petroleum is still king of the hill. "Petroleum will maintain its position in the next 30 years... at the same time, I believe we will see a rise in the use of alternative sources of fuel in the very near future, which will also cause a gradual decrease [in the price of oil]. In many places, there is already significant use of other fossil fuels like natural gas or coal and of unconventional energy sources, such as the 'oil sands' project in Canada. There is a lot of potential here," he says. "[In the future], the trend to produce gas from biofuels will not be limited to sugar and vegetable oils, but will also include the use of many types of organic wastes and even domestic waste," he predicts. "In addition, I expect an expansion in the utilization of other energy sources such as nuclear power, wind power and solar energy for the production of electricity and a parallel increase in the use of plug-in electric cars or hydrogen-propelled cars." According to Mor, the main force that will drive this future diversification of energy sources will not necessarily be the high cost of oil. "The problem will not be the scarcity of fossil fuels for cars, but rather the greenhouse gasses (CO2 emissions) produced by the use of these fuels and the threat of global warming," he says. "The issue of energy security will also come into play here. Western countries will seek to limit their dependency on foreign imports, particularly from shaky regimes like the Gulf states, Russia and Venezuela. Just over a year ago, Europe suffered when Russia limited its export of natural gas to the continent over a dispute with Ukraine and Belarus." As for Israel specifically, Mor says the country "is facing a major challenge in introducing alternative energy sources. Currently, about 75% of its energy comes from coal, the rest from oil and natural gas. In 15 or so years, maybe 10% of its energy will come from solar plants in the Negev and also on private rooftops. There is also the potential for the utilization of wind power in the Golan Heights and Galilee." Dr. Mor stresses the importance of ensuring efficient and economic use of power on top of a wider array of sources. "Incentives for increased efficiency are a hidden source of energy. We can save up to 20% of our power by simply using it more wisely," he says. "Even better light bulbs or better air-conditioning systems can save significant energy."

Join Jerusalem Post Premium Plus now for just $5 and upgrade your experience with an ads-free website and exclusive content. Click here>>

Related Content

Jisr az-Zarq
April 3, 2014
Residents of Jisr az-Zarqa beckon Israel Trail hikers to enjoy their town

By SHARON UDASIN

Cookie Settings