IS THERE REALLY AN ENERGY CRISIS?
By Alan Caruba
The world is not about to run out of oil, but the price is likely to remain where the Saudis and other oil producing nations want it, knowing that too high a price retards the billions that must be invested to find new reserves and then extract, transport and refine it. They know that the world is growing hungrier for oil as nations like China and India industrialize and become major economic centers.
The petroleum we use today is the result of careful decisions made a decade or two ago by the world’s greatest masters of risk, the oil companies upon which we depend to keep the world’s economic engine running. If the price of oil was less in the past, it is because fewer nations were competing for oil and it could be extracted from places less costly than deep oceans.
These days, when I hear our politicians talk of “energy independence,” while often refusing to allow our own reserves of oil and natural gas to be tapped, I am mindful that they are deceiving us.
This was clarified in an excellent policy analysis published recently by the Cato Institute. The authors are Eugene Gholz, an assistant professor of public affairs at the University of Texas at Austin, and Daryl G. Press, an associate professor of government at Dartmouth University. It had six pages of footnotes as an indication of how thoroughly researched it was.
The title of the analysis is Energy Alarmism: The Myths That Make Americans Worry About Oil.
The authors of the Cato analysis assert that the notion of ‘peak oil’ depletion of existing and future undiscovered reserves of oil is a myth. This is based on what they determined is “scant evidence and dubious models of how the oil market responds to scarcity.” That is very good news.
The report repeats what every Economics 101 student knows (or is supposed to know): “Market forces, modified by the cartel behavior of OPEC, determine the key factors that affect oil supply and prices.” And now you know (or should know) why a tiny news story about Saudi Arabia’s intention to pump more oil is an important indicator.
Perhaps the most important element of the Cato analysis is the finding that the use of U.S. military power in the Middle East is counterproductive to our interests there. “Past efforts to increase stability in oil-producing areas by supporting dictators, policing violent regions, or spreading democracy have a dubious track record.”
What most Americans do not know is that the world’s major oil companies have wisely diversified their oil holdings to insure that any perturbation in the Middle East will not significantly impact the flow of oil to the world market. One of the regions where oil exists in abundance is Africa. Russia has huge amounts. The Pacific Basin is another, and even the Gulf of Mexico still holds great promise of more oil. More reserves exist off our continental shelf on both coasts.
We will surely continue to be bombarded by self-serving politicians and others telling us that China poses a threat to the world oil market or that we have to dramatically reduce our use of oil, but the facts do not support these claims. Proposals to raise taxes on gas consumption only hide the politicians' greed for funding their many dubious “earmarked” projects.
The truth is to be found in the Cato analysis and elsewhere, if you can resist being stampeded by political environmentalists and their Liberal Leftist allies into drastically altering our economy by embracing such half-baked schemes as federally subsidized ethanol production or the nonsense of wind and solar energy. The good news is that the bad news is wrong.
Government, the Economy, & Economic Prosperity
Alan Caruba is a veteran business and science writer, a Public Relations Counselor, and Founder of the National Anxiety Center, a clearinghouse for information about media-driven scare campaigns. Caruba writes a weekly commentary, "Warning Signs," posted on the Internet website of the National Anxiety Center, which is located at www.anxietycenter.com.
Caruba’s new book, Right Answers: Separating Fact from Fantasy, has been published by Merril Press.
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