I think many would take issue with that 80 year figure... the definition for "proven" oil reserves has been "adjusted" by some for their own agendas. The more conservative definitions put that figure for the Saudi fields at 40 years.
Either way, the bottom line doesn't change.
The problem is not dependence or not on the middle east. Even if all oil were produced right here in the USA, we would still have the same problem:
The global economies (including ourselves) are absolutely dependent on a resource that is rapidly becoming exhausted, and nobody is making anything other than token efforts to face that fact.
Whether the point where oil is exhausted is 40 years or 50 years or 80 years is of little consequence to me, anyway.
The solid, sustained uptrend in oil prices over the past several years is not just a harbinger of far worse economic realities of the future, it is economic fact today----INFLATIONARY economic fact (you heard it here first, Mr. Greenspan!). That is, global demand for oil is now, has been, and will continue to outpace the rate at which oil can be pumped OR refined, and oil will continue to go up in price when considering things in a long-term frame of reference. The only thing that can derail this trend is a global economic slowdown/recession, which is the only thing I can see that will slow down or stop the relentlessly increasing demand for oil.
Sure, if we pumped Alaska and the offshore fields at full tilt till they were bone dry, the price of oil would drop in the short and medium term, but in my opinion this would only slow down the bull market in oil for a year or two or three. The long-term uptrend would be intact because of the relative rates of change of supply vs. demand.
Yes, if we pumped all that oil, people could feel wonderful because we are no longer dependent on middle eastern countries of dubious stability or sanity. But that would be the worst thing that could happen, not the best, because that is about the only motivation we seem to have to alter the petro-centric economy in the first place, and even that doesn't seem to provide much real motivation. Take that away, and nothing will be done for decades, and we'll just continue to blithely gulp down bigger and bigger quantities of oil and become even MORE petro-centric. This is precisely what happened after the last middle east oil shock. I clearly remember mile-long lines at the gas pumps, people fighting over gas, people creeping around with hoses siphoning tanks, etc. I also remember a whole lotta talk and planning and government funding of alternative energy projects and technologies that rapidly dwindled to a token trickle after the political situation stabilized, and all the talk just went away, and was largely relegated to those labeled "lunatic fringe." Suddenly the problem was solved. But.... it wasn't. It didn't go away then, and it won't go away now either. It simply got worse, that's all, because now there is even less time to prepare.
Also, I assert this would only slow down the bull market in oil for a year or two or three, and the long-term outcome in terms of rising prices would be unchanged: oil will tend to rise over any long-term time frame because the world's economies are developing, their infrastructure is designed to be absolutely dependent on oil, and so demand will increase at least linearly, and possibly curvilinearly.
And finally, consider this: if we began supplying a significant proportion of the world's oil, would we really be able to produce oil at prices less than today's price of oil, given that it is probably much more expensive to produce oil in this country than in some third-world country, and given the fact that somehow somewhere refineries would have to be built, at a huge cost???
I think not. And if I am correct, then the oil we contribute would probably be more expensive than most of the rest of the world's oil currently is, and that also would diminish the effects of decreased demand relative to supply that would result if there were a large influx of oil supplies into the global markets because we decided to milk our reserves dry.
Net effect---the price of oil would decrease somewhat in the short and medium term, but would be pretty much unchanged in the long term.
JMVHO.....
T |
