Turning Up the Heat

The analogy of a frog in a pot of boiling water is well known, but for those who may be unfamiliar with it, I will re-capitulate: If you place a frog in a pot of water that is already boiling, the frog will immediately jump out. If, however, you place a frog in a cool pot of water and gradually turn up the heat, the frog will fail to notice the change and (assuming it’s not distracted by something outside) will stay in the water until it succumbs to the excess heat. (Readers are urged to take my word for it and not try this at home.)

Oil prices declined to around $63 a barrel today after hitting a record $67.10 five days earlier. This is a trend that seems likely to continue, but only in the short-term. The summer is almost over, leading to three relevant events.

First, there will be a reduction in the amount of fuel used by the millions of travelers in this country who are anxious to see another part of the country. Second, as temperatures fall, there will be reduced need for temperature control everywhere. Third, the Atlantic hurricane season is almost past its peak, and will be largely concluded in another six weeks. Oil buyers will no longer be spooked by the prospect of a hurricane disrupting supplies from the Gulf of Mexico.

By the end of September, I think that we should be seeing oil well below $60 a barrel again, barring some other upheaval.

The Bush administration and its most avid supporters will probably say that this development shows that the record oil prices this last week were a one-time event, never to be repeated. They may even try to say that it shows the success of the new energy bill signed last week, although Mr. Bush, when he signed it, admitted it would have no effect on gas prices.

Unfortunately, I believe that this mindset is totally wrong, rather, the American people are like the frog. The heat is gradually being turned up and some of us are vaguely aware of it, but cannot convince the rest of the body to do something for the benefit of all. Now, with the heat apparently being turned down, more of the body will be convinced that there is no problem. They will begin adjusting to the existing conditions like the frog in the warmer water, as they have in previous years. Like the frog, they will think that life is going on as it always has and forget (emotionally, at least) that their condition ever changed. But then winter will follow with the desire for warmth and the heat will go up again (literally and figuratively).

The heat being applied in regards to oil prices is not going down; in the long-term it can only logically be on a permanent increasing trend. The supply of oil is not going to go up in any significant way, there being no great deposits waiting to be discovered, at least not without huge investments that will reduce their value.

Further, as more and more countries make their way into relative prosperity, we will have more and more people wanting to have the energy-devouring devices just like Americans have. They will want their own cars to drive everyplace in and impress their friends, their cell phones with the camera and E-mail access (requiring lots of battery charges), and their own home computer so that they, too, can become proto-bloggers like me.

Supply (relatively constant) + demand (steadily increasing) = frog in a growing amount of trouble (however blissfully unaware).

However, the only action we have seen this week remotely affecting this situation was the Bush administration reportedly deciding to abandon new fuel economy standards for large SUVs like Hummers. While these new standards would make only a small dent in energy demand, it would still be a start to turning conditions around and, at least, preventing them from getting any worse.

But alas, such a turn is not to be, not now anyway, and probably not anytime soon. As much as I would like to change things, unfortunately, I am only a small part of the body of the frog – not its feet, and certainly not its brains! Perhaps this week proves again that the frog symbolizing the American body politic really has no brains, and will continue its suicidal do-nothing attitude until it is too late.