The Age of Oil
The Age of Coal began when declining supplies of wood in Great Britain caused its price to climb. Two centuries later, oil took the place of coal as “the king of energy sources” because of its convenience and its high flexibility in many applications, but coal was neither exhausted nor scarce. Oil substitution is simply a matter of cost and public needs, not of scarcity. The countries richest in oil have minimized their oil investments during the last 20 years, mainly for fear of creating a permanent excess capacity such as that which provoked the crisis in 1986 (when oil prices plummeted to below $10/bbl). In fact, countries such as Saudi Arabia or Iraq (which together hold about 35% of the world’s proven reserves of oil) produce petroleum only from a few old fields, although they have discovered but not developed more than 50 new fields each. To “cry wolf” over the availability of oil has the sole effect of perpetuating a misguided obsession with oil security and control that is already rooted in Western public opinion – an obsession that historically has invariably led to bad political decisions. The worst effect of the recurring oil panic is that it has driven Western political circles toward oil imperialism and attempts to assert direct or indirect control over oil-producing regions.
So says Leonardo Maugeri, Group Senior Vice President for Corporate Strategies and Planning for the Italian energy company eni: “Oil: Never Cry Wolf – Why the Petroleum Age Is Far From Over.”
Click here for a chart of colonial and US energy consumption by source.
