Editor’s Note: Meeting the Challenge is an open-ended series from EnergytechStocks.com intended to build a blueprint for how the world can meet the incredible increase in energy that will be needed by 2030 without endangering the environment or nations’ security.

Posted: September 20, 2007

Phil Flynn strongly believes the world can meet its energy challenge by allowing commodity markets to do their job without government interference. Yes, prices will rise sharply over the next few years, and consumers will feel the pain, but the overall economy should be okay, according to Flynn. In the long run, Flynn says, it’s going to take oil prices that are sharply higher than the already-high prices of today to cure the world’s oil addiction through the development of alternative fuels.

The noted energy analyst for Alaron Trading, who every day is called upon by the media to explain in 20 seconds or less why spot oil prices moved up or down that day, recently spent nearly two hours looking farther into the future of energy in an exclusive interview with EnergyTechStocks.com. This story is the first of a three-part series based on that interview. It also is the next installment of EnergyTechStocks.com’s open-ended series, “Meeting the Challenge,” which has so far looked at the recommendations of Matthew Simmons, the noted energy investment banker, and John Felmy, chief economist for the American Petroleum Institute.

Flynn sees the price of oil rising to $120 a barrel and gasoline in the United States selling for $5.50 a gallon within five years, as commodity markets respond to the historic and ongoing global increase in oil demand being fuelled largely by China. “Even the International Energy Agency can’t keep up with demand. I don’t think China knows itself” how fast its need for oil is growing, Flynn said.

Flynn, who expects China to keep growing, said that as long as that $120-a-barrel price reflects continued economic growth in the world and not some geopolitical event, the overall economy should be just fine, although obviously the subsequent $5.50 a gallon pump price will be a pain in many Americans’ pocketbooks.

Beyond the year 2012 Flynn’s crystal ball is cloudy. He said that whether oil prices continue to rise above $120 a barrel will depend on the development of alternative transportation fuels. “Without alternative fuels, we may not top out at $120,” Flynn said, his voice reflecting a certain “Heaven help us” feeling if countries don’t develop alternatives to gasoline-powered vehicles, in particular, plug-in hybrid vehicles that can run 40 miles or farther on a single “fill-up” of electricity from an ordinary wall outlet.

With alternative fuels, Flynn is optimistic that $120 a barrel may be as high as the price of oil ever gets.

Part 2 of the Flynn Series runs tomorrow, September 21