The True Debate About Energy: When Oil Runs Out...

Abstract

The OPEC Website holds an interesting FAQS (Frequently Asked Questions) about oil industry. The questions are very simple. Anybody could ask them. And the answers are still as simple as could be. You do not need to be an economist to understand these quite complicated issues - as we used to think - in plain words, without figures, or statistics' tables, or any such stuff that makes ordinary folks run away.

So, Bravo for the editor who, shrewdly let us fathom from a single sentence that "at the end of 2004, world proven crude oil reserves stood at 1,144,013 million barrels, of which 896,659 million barrels, or 78.4 per cent, was in OPEC Member Countries", which was the answer to the anxious question: How much oil is there in the world?

Another no less anxious question says: Will we ever see a repeat of the 1970s oil crisis? And guess what! The answer is as simple as that: No. The editor is sure that nothing would happen that would disturb the "tranquility" of the market. We wish he were right, but we do not think the matter may be so easily settled.

Do we need to remind anybody that oil prices have bypassed $60/b in 2005? Was it the normal course, given the fact that the Gulf region undergoes tremendous changes with the Iraq war, the post-Saddam chaos, the election of an "enlightened" in Iran, heading straightforward towards the succession of Saddam Hussein (in both countries), not to speak of the "black series" unleashed in Lebanon, etc?

Ok. The world will perhaps not see another 1973's oil crisis in the same terms; yet anxiety is still sticking up to the market and to all the actors concerned by the energy issues in the years to come. As many of us can imagine - and as the OPEC site editor emphasizes in his answer to the question "is the world running out of oil?" - this energy source is indeed a limited one; and as this truth is also known to the producers and to the consumers as well, it is just normal that both parties get anguished about the issue.

Keywords: OPEC, oil, prices, production, industry, exports, Middle East

JEL Classification: N7, N76, Q3, Q4, Q40, Q42