Can OPEC save the world economy? …Cheap oil? …Not for long!

After the Peak Oil plateau, from 2010, we will move into the post-plateau down-slope in world oil availability. Average annual long-term loss will likely run at about 4% by volume, and about 6% annual for export volumes, specially due to the immoderate appetites of oil producer countries — who actually use the stuff themselves! According to the IBRD’s Global Economic Prospects 2009 world oil reserves are (I cite) ‘incredibly stable’ at approximately 40 years-equivalent of current demand. Confusing this with ‘abundance,’ by design or ignorance, will in no way ensure adequate world oil supply. The World Bank, to be sure, likes to maintain the folksy notion that present production will stay rock solid for exactly 40 years, then fall to zero in an instant! In fact the Consumer Herd will soon face, and adapt to ever-declining annual export supply because there is No Alternative.
The problem with Petro Keynesian growth is that it has no feedback, exactly like, but more violent than the New Economics model. As we found in 2008, oil prices were able to get close to $150/bbl, and the metals, minerals and agro commodities attained related, often all-time high prices. For achieving Petro Keynesian recovery of the global economy we need to avoid these extreme highs, but achieve intermediate values. To be sure, OPEC tends not to open the taps too fast, when oil prices go to exotic highs, and in the future OPEC will have to learn a very difficult balancing act. OPEC has to explain why, quite soon, it will be geologically unable to raise exports, while domestic economy oil demand of member states just keeps on growing.

The easy retort is that if OPEC can cut export supply today, it can raise it in say 2010 or 2011. This is probably not going to be true, but this new fact will need a lot of communicating, for one reason because both oil importer countries, and OPEC members have a fond belief in OPEC’s status of “supplier of last resort.”

We can be certain the burst of Petro Keynesian economic growth in 2005-2007 was the bad kind of CO