Declining Oil Reserves
chrerick at email.msn.com
Tue Feb 22 08:47:48 EST 2000
"Karl Davies" <karl at daviesand.com> wrote in message
news:38B19AFF.E0451971 at daviesand.com...
> We hear all kinds of estimates on how much oil is left in the ground and
> when it will run out. Most forecasts are pretty rosy, but are they
> accurate? And perhaps more importantly, are they really significant?
> What the oil companies and governments generally fail to mention in
> their forecasts is when demand is likely to exceed supplies.
As long as markets are allowed to operate, supply need never exceed demand.
> comes much sooner than when supplies run out, and in the case of oil, it
> will have profound effects on all economic activity.
> There's a growing body of evidence indicating that we are currently very
> near the peak of global oil production, and that supplies are about to
> begin their inevitable decline. Prices are about to begin their
> inevitable rise.
Karl's analysis fails to take into account the existence of "back stop"
technologies. In particular, as the price of oil begins to rise, alternative
energy sources become economically viable. For example, I have seen studies
that indicate that solar cells become very competitive when the price of oil
rises to about $25 per barrel. Thus should the price of oil stay much above
$25 per barrel for any substantial period of time, industry and individuals
will begin to bring solar on line, thereby forcing the price of oil back
down to the $25 range. (Of course, this is a long run phenomena. In the
short run, the price of oil can rise and has risen substantially above $25.)
With technological advances, the cost of solar power will fall, hence the
price of oil will decline long term.
> What will the effects be on forests and forestry? Is this something we
> should be trying to anticipate and plan for? For some background and
> links, go to
> Karl Davies, Practicing Forester
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