Another example of decreasing supply and increasing demand: Columbia

Colombia was the third largest South American producer, and one of the top ten suppliers to the United States. Now production is continuing to decline, and as soon as three years from now Colombia may be importing fuel. But it is not that curve that I want to discuss but the other, the rising domestic use of fuel and how this, in turn, reduces the amount that will be exported.

For many countries, such as Colombia, oil provides a desperately needed revenue stream that underpins the national economy. But it also provides power to the country, and, through local industries that it supports, it also creates more jobs and an economy that can, under a wise government, sustain itself after the oil runs out (see some of the Gulf States for example).

Back in 1970 Saudi Arabia had only six million people, of whom a third were only there as temporary workers. It now has almost twenty-two million people (about half the population of the United Kingdom). To provide an economic underpinning to the population, the state must increasingly provide additional industry that will create employment and support outside of the oil industry itself. Thus an increasing amount of oil and power must remain in country if it is to drive that industry and provide the energy and raw material needed to make it run.

More after the jump at The Oil Drum