Billion Dollar Buggy Whips

I don't know about most of you, but the cost of fueling my car is starting to cut into other priorities for me recently, and it would appear that things will get worse before they get better. Just today, George W. Bush was speaking about the oil "'crisis" and the rising gasoline prices. He sounded like a man powerless to stop the situation, but at least he didn't seem to have the Chicken Little attitude that seems to emenate from the Capitol Dome. One point that he made was that the American people expect oil companies to put a lot of their profits back into building new refineries, searching for more sources of oil and developing alternate sources of energy.

I agree with these points, and the big oil companies will do well to take heed, especially on that last point that I mentioned, not just out of civic duty, but as a matter of Corporate survival.

Why do I say this? Let's gaze into the crystal ball as we spread the tarot cards.

Then again, let's not. Let's just analyze the situation. Over the past century, there has been an almost explosive increase in technological innovation, and I don't see that trend reversing itself any time soon. One or more of the innovations we can expect to see will involve energy sources, and techniques of putting those sources to use. We might be a long way from using anti-matter to power the warp drive, but in the interim, we will develop something, and more likely sooner than later. Whoever does develop this source is in for a huge payday.

This leaves the oil companies either developing the next source of energy or all but ceasing to exist. Five billion dollars in research and development may sound like a huge amount of money, but considering their alternatives, I don't see BP, Exxon/Mobil or Standard Oil as really having much of a choice. Without the need to refine oil into fuel, there is not much need for all the oil companies, except to provide the source of plastics and other petrochemical products, which won't do much for their bottom lines.

So, I say that we shouldn't be too concerned about the current oil company profits. They should enjoy the market they have while it still exists, because it won't be too long before they are selling off their assets to try to make payroll, unless they develop the next phase of powering the American Industrial Machine.