January 5, 2024 - 2:00pm
It is an unavoidable fact that our economic wellbeing usually depends, directly or indirectly, on supposedly “boring” issues. Talk about supply chains may seem dry, but the global economy is kept running by the consumption of around 100 million barrels of crude oil per day. Without this, the world as we know it would come to a screeching halt, economies would collapse, and millions of people would suffer shortages in essential supplies. No matter how often politicians repeat the mantra of “phasing out fossil fuels”, they all know that the oil-based global economy is far from coming to an end.
With this in mind, there has been much discussion this week of the “overconsumption” of oil as Houthi attacks in the Red Sea threaten global trade. This argument is misjudged: the world will not run out of oil, and there is a convincing case that “peak cheap oil is a myth.” The bad news, however, is that the world will also not run out of suicidal policy proposals, from demands to “just stop oil” to the slowing down of natural gas exports. More often than not, limitations are imposed not by the laws of physics but by the laws of politics.
Take Venezuela, for instance. With an estimated 300 billion barrels, the country has the largest proven reserves of crude oil in the world, but due to political instability not enough of the supply makes it to the market. Another example is the shale revolution in the United States, which has turned the country from a net importer to a net exporter within 15 years.
What’s more, there is no end in sight. In the 21st century we think about technological revolutions through names such as Google, Meta and AI, but the world’s leading energy producers are technological innovators in their own right. The time it takes to drill an average well has decreased by 40% over the last three years, and output from existing wells can be increased by the process of refracking, which quite literally squeezes the last drops out of known deposits.
The Western Hemisphere is already outproducing the Middle East, which in the public imagination remains synonymous with oil wealth. If Argentina, with pro-fossil fuel Javier Milei as President, ramps up production and European nations such as France, Germany and the UK give up their fracking bans, Middle Eastern and Russian oil would become even less important. The much-discussed Opec+ supply cuts are not a sign of strength, but instead of panic.
The potential for human flourishing is not limited by the resources nature still has in store for us. The same, however, cannot be said of misguided policy decisions which artificially constrain what would still be available in abundance.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
SubscribeIf only!
How ironic to use the word suicidal, which is of course the path that humanity is on by creating the greenhouse effect through over use of fossil fuels.
The anthropogenic greenhouse effect, such as it is, has already been exposed by the data as a minor effect that is not a global threat. “Suicidal” it emphatically is not.
Ah right, by some bloke’s blog no doubt?
The IPCC’s output – and I’m not talking about policymaker summaries which is where you’re getting your mad ideas from – do not support the popularised and alarmist political narrative.
You can try to be as patronising as you like, but you’re still just peddling politics here.
That’s the thing. There’s nothing in the IPCC reports that show any significant increase in climate events or deaths today.
Lies
Their latest report states this:
Continued greenhouse gas emissions will lead to increasing global warming, with the best estimate of reaching 1.5°C in the near term in considered scenarios and modelled pathways. Every increment of global warming will intensify multiple and concurrent hazards
Hope that helps.
https://www.ipcc.ch/report/ar6/syr/resources/spm-headline-statements
In 2020 millions of people were killed and millions more pauperised by a man-made organism developed in a sloppy Chinese lab and financed by US taxpayers. Do you really think climate change will wipe us out before the bureaucrats do?
Hear !Hear!
Surely the very opposite is true. If we transition to an economy with a decreasing reliance on oil that will indeed ‘defeat’ OPEC. Logically, an increasing dependence on ‘renewable’ energy will have massive geopolitical advantages for any non-oil producing state, ie the majority of them. And that is without taking into account the pollution engendered by the production and consumption of fossil fuels. Both of these serious benefits are in addition to whatever effect fossil fuels have on climate change.
“Surely the very opposite is true. If we transition to an economy with a decreasing reliance on oil that will indeed ‘defeat’ OPEC.”
Not so. As the article explains, the West is failing to exploit colossal reserves that would sit outside OPEC’s control. As long as the West fails at this, hydrocarbons from OPEC countries will dominate global energy prices.
“Logically, an increasing dependence on ‘renewable’ energy will have massive geopolitical advantages for any non-oil producing state…”
Again, not so. Renewable energy is the most ineffective possible strategy for decarbonisation: it requires vast infrastructure investment both in terms of generating capacity and grid expansion, and consequently is actually supported by the oil states because it guarantees OPEC dependence on the part of the oil-consuming nations for decades yet. Nuclear power, the one technology that could actually displace hydrocarbon energy, is militantly opposed by a combination of fossil fuel vested interests, the renewables sector, and the globalised eco-activist agenda.
Don’t forget the Chinese stranglehold on wind and solar supply chains.
The west is infinitely more dependent on Chinese supply chains for wind and solar, than it is on OPEC for oil and gas.
The article breezily claims that the Western hemisphere is out producing the OPEC plus nations, however Venezuela itself admits that years of sanctions and technical obsolescence have left it’s oil industry far below par in daily production levels. Not sure if the argument is based on actual situations on the ground.
There needs to be far greater unity of purpose in conflict resolution and a realistic as well as sober acknowledgement of the fact that fossil fuels are here to stay for quite some more time.
And less moral posturing.
The regime in Venezuela is appalling though. It would be hard for the West to make common cause with it.
Realpolitik and economics determines foreign policy much more than is usually admitted
True, but making common cause with socialists is surely beyond the pale. We have to draw the line somewhere.
article refers to potential reserves in Venezuela
Precisely. The US had Venezuela under sanctions till the Iran calculations have got upset. That is the backdrop.
The West appears to have fallen into the hands of those who are actively working for its destruction.
Something in the geo-politics here – we do and must change the dynamic on our reliance on Middle Eastern and Russian Oil. Although it can be a useful bit of leverage when the Producer needs the Purchaser just as much.
Just Stop Oil is going to have to get ‘real’ about Nuclear to be credible. Renewables have a vital role but pretty much everyone grasps we can’t manage on that alone.
Of course greater efficiency in usage and carbon capture should be playing as great a role too.
The fracking debate in the UK has the Nimby problem as much as the Green agenda to surmount. The former probably a bigger concern for some politicians.