Their Energy Policy–And Ours

Their Energy Policy–And Ours

Despite last year’s run-up in gasoline prices, the energy outlook for the United States appears positive. Adjusted for inflation, gas prices remain near their historic lows, supplies seem adequate, and while some commentators point to growing demand in India and China as evidence that the price of crude is heading up- ward, other developments, notably the United Nations’ push to allow Iraq to resume limited oil sales, suggest the opposite. Indeed, after spurting as much as 40 percent last year, crude oil prices reversed direction in January and, by early March, had fallen back by 20 percent. Equally significant, the peculiar psychology of the seventies seems to have been broken for good. Although total geological oil resources remain finite, known oil reserves, as most people now recognize, are an entirely different story. Rather than just the amount of oil in the earth, they are a function of the rate of consumption, intensity of exploration, our ability to locate deposits under thousands of feet of bedrock and mantle, and our ability to bring them to the surface. The result, paradoxically, is that the more oil the world uses, the more it seems to find. Despite the gloom and doom of such neo-Malthusians as Lester Brown and the Worldwatch Institute, this is why the problem bedeviling the energy markets since the early eighties has not been one of long-term shortage but of persistent oversupply.

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Lima