As the price of crude continues to climb it is necessary to ask the question whether or not we are in a situation of oil disparity or does the price of gas have more to do with Middle Eastern politics. We saw int he 1970's oil crisis the price of crude sky rocketed but as politics cooled down we continued to produce more oil than ever before and prices dropped for nearly two decades. Currently they are on the rise again as well as political unrest.
As an objective economist it is necessary to determine the true cause of our present surge in the price of oil. Maybe once we determine whether or not we are immediately running out of oil it will be easier to make long term decisions about energy saving policies that have unnecessarily high costs with minimal long term return.
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Despite what we read daily, we are no where close to running out of "oil". For example, the Bakken formation which covers most of North Dakota was just surveyed. It has 25 times as much recoverable oil than in the last survey done in 1952. Even so, the recoverable reserves has only been increased to 3 to 4 billion barrels of oil. The true estimate of oil in the formation is from 200 billion to 500 billion barrels. At today's prices, many other know fields can produce many times the amount of listed reserves. The total oil consumed to date is around 1 trillion barrels. The total known to exist is around 13 trillion barrels. In addition, there is that much more already "in process". The ocean floor is layered with methane hydrates that hold more carbon than all the plants on the earths surface. The estimated number of methanogens (working away at renewing more energy) is 5 x 10 to the 30!
Agreed, I would just like to see some headlines in the New York times say one or some of the following:
"Oil crisis found not to be disparity!"
"Politics Drive price of oil!"
But I don't think that'll happen any time soon.
On a day to day basis I have to confront pears in an academic setting who are firm believers in Peak Oil theory. It is hard for people to understand that when an extraction form becomes economically feasible it is only the beginning of research and development potential. Take for example the tar sands in Canada. I have heard that at $60 a barrel the conversation of tar sands into a fuel source is competitive. Once industry is focused on tar sands the price at which it is competitive will be lower still. By no means are we as a society going to run out of fossil fuels.
A book by Mark Jaccard called "Sustainable fossil fuels" sites this issue and proposes further investment into making fossil fuels more sustainable. It's a good read.
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