Charlestowne Premium Beverages Inc. (FPWM)

[otterman]

Story in our local paper yesterday. Also noted in a related article (which I dont have access too), they said 'Alternative fueled vehicles (eg: a water powered engine from Ballard Power)) are still years away from becoming a reality.'

Oil at $50 -- so what? Energy users don't appear to be changing habits because of high prices

By IAN WILSON, CALGARY SUN

Consumers love to complain.

If our food isn't cooked right, we send it back.

If it costs too much to go to the movies, we rent a flick and stay home.

Yet, when it comes to energy consumption, we may gripe -- but we don't change our habits.

This year, some analysts predicted a "super spike" which would send crude prices over $100 a barrel.

While that view isn't shared by everyone, many energy researchers agree oil will stay in the $40-$50 a barrel range for at least the next year -- which means consumers can expect continued high prices at the pumps.

Natural gas prices hovering around $6 per gigajoule have also made homeowners feel the pinch from heating bills.

On top of that, sustained high energy prices can lead to increases in transportation costs, which can make food and manufactured goods more expensive.

With that in mind, you'd think people would change their habits. But that isn't the case, says Stephen Wuori, chief financial officer for Enbridge Inc., Canada's second-largest pipeline company.

"It's hard to say where the demand destruction is going to take place, other than at the margin where people make individual decisions about SUVs versus hybrid cars or whatever it may be," says Wuori, who drives a hybrid. "But en masse, it's hard to imagine that the demand destruction is going to be very dramatic."

Co-worker Stephen Letwin, vice-president gas strategy and corporate development, says the price of oil will have to go up dramatically before there's a backlash.

"What was the price of oil in 1981 in real dollars? It was $80," says Letwin, who drives an SUV. "I think if it hits $80, you'll really start to see it come back. I think you'll see a fair amount of consumption in that $50 range. I don't think there's many people cutting back."

Wuori agrees, saying consumers may not be happy about the high prices, but they're not panicking either.

"Growing up in the U.S., I would've sworn that they would need the national guard by now with gasoline prices at $2.30-$2.50 a gallon. That's sacrilegious, and yet everybody's accepting it," says Wuori, adding changing habits in India and China will continue to fuel demand.

"China's now the second-largest consumer of oil in the world and if you look at what's happening in India, like it or not sociologically, people are moving away from the traditional means of transport to automobiles, kind of like the West has done."

Robert Ebel -- the chairman of energy and national securities at the Center for Strategic and International Studies in the U.S. -- says Americans' refusal to make lifestyle changes means the country is putting its future in the hands of others.

"In the past, a policy to do nothing was acceptable. It would get you by -- that's no longer true," Ebel told an oil conference hosted by the Canadian Energy Research Institute last week.

"American consumers spend very little time thinking about our dependence on foreign oil. That's left to politicians."

Ebel, who served with the CIA for 11 years, as well as the federal energy office, doesn't think U.S. President George W. Bush's energy bill will reduce that dependence.

"We are heading in the wrong direction," says Ebel. The solution, he adds, is "saying goodbye to the internal combustible engine." But he fears that will be a long goodbye.

Renewable sources of energy -- solar, wind, geothermal, etc. -- accounted for 8.8% of U.S. energy production in 2004. That's down from 9.3% 20 years ago.

While hybrid vehicles are a good start towards better energy demand management, Ebel says they're too expensive to mass-produce and to buy.

"There is much we can do in terms of balancing energy supply and demand," he says.

"Are you prepared to make changes in your lifestyle? The jury's still out."