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By INVESTOR'S BUSINESS DAILY | Posted Tuesday, August 04, 2009 4:20 PM PT
Energy Policy: The chief economist of the International Energy Agency says the world is running out of oil. We've been told that for the last 150 years. The only thing we're running out of is the will to drill.
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Ever since the first oil well was drilled in Titusville, Pa., in 1859, experts have been predicting we would soon run out of oil. The latest is Dr. Fatih Birol, chief economist for the International Energy Agency in Paris, whose job it is to assess future energy supplies by OECD countries.
In an interview with the Independent, Dr. Birol says that based on a survey of 600 existing oil fields covering three quarters of global reserves, oil is running out faster than previously predicted, and global production is about to peak in 19 years.
"One day we will run out of oil, it is not today or tomorrow, but one day we will run out of oil and we have to leave oil before it leaves us, and we have to prepare ourselves for that day," Dr. Birol said. Gather ye switch grass while ye may.
In 1914, the U.S. Bureau of Mines predicted American oil reserves would last merely a decade. In both 1939 and 1951, the Interior Department estimated oil supply at only 13 years. And in 1977, President Carter gloomily predicted that we "could use up all the proven reserves of oil in the entire world by the end of the next decade."
Consider that in 1970, experts believed the world had 612 billion barrels of proved reserves.
Over the next three decades the world pumped more than 767 billion barrels. By 2006, instead of running out of oil, world reserves had actually risen to 1.2 trillion barrels.
Was this another miracle of the loaves and fishes? No, it is the natural result of technology combined with the profit motive and innovation. Doomsayers could not anticipate wells that could drill miles beneath the ocean's surface, develop extraction techniques that would bring dead wells to life or almost literally produce oil from a stone.
The greatest impediment to oil discovery and recovery is government. Great swaths of onshore and offshore oil resources have been placed off-limits by our government. We don't even really know what we have — and what we know is there, we can't get at.
To its credit, IEA notes that chronic underinvestment by oil-producing countries is a problem that will create an "oil crunch" that will jeopardize any hopes of a recovery from the global recession.
But what we have is not peak oil, but peak government. Ronald Bailey has pointed out at ReasonOnline that "77% of the world's known oil reserves are in the hands of state-owned oil companies" that "do not respond to market signals and so are underinvesting in new production technologies and even in the production facilities they currently have."
There are friendlier places to find more oil, places such as Alaska, our Outer Continental Shelf and the Rocky Mountain West, if we had the political will. Our future should not be dependent on thugs like Hugo Chavez and Mahmoud Ahmadinejad in places like Venezuela and Iran, or on the political whims of OPEC.
Science magazine reports that the U.S. Geological Survey says the Chukchi Sea off Alaska holds more than anyone thought — 1.6 trillion cubic feet of undiscovered gas, or 30% of the world's supply, and 83 billion barrels of undiscovered oil, 4% of the global conventional resources.
The Green River Formation, an oil-rich region in Colorado, Utah and Wyoming, has been called the "Persia of the West." This formation has the largest known oil shale deposits in the world, holding from 1.5 trillion to 1.8 trillion barrels of crude.
Then there are the riches beneath ANWR and the Outer Continental Shelf. Let us seek, and we shall find. We always have.
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