Oil dependency fuels crisis

Things are likely to get worse before they get better

Imagine the most hopeful scenario for increasing global oil supplies to keep pace with anticipated demand over the next few decades, and you’ll likely still fall short of projected consumption.

The world oil price hit a new high of $110 (U.S.) a barrel last week, an 11-fold increase over the past decade. In the energy crisis of the 1970s, a soaring crude price spurred the discovery of new reserves and prodded consumers and industry to slash their oil consumption. The oil price collapsed and spent the last two decades of the century in the doldrums.

It’s very different this time.

Consumers haven’t panicked over rising prices, perhaps because they haven’t been confronted with the block-long line-ups at filling stations that marked the “oil shocks” of 1973 and 1979. More ominously, we’ve run out of easily accessible oil reserves. In the past 18 years, despite billions of dollars in exploration spending, the oil industry has found just one new field of considerable size, in Kazakhstan’s portion of the Caspian Sea. Typical of new finds in the industry’s modern era, the Kashagan field is over-budget and has been plagued with delays.

With the industrial revolutions in China and India barely underway, and no sign of a decline in consumption in mature economies, the world will soon need far more oil than the 85 million barrels of crude per day that producers currently pump out of the ground. Even some industry leaders now doubt they can keep matching demand with supply much beyond the next decade.

Toronto Star