Av Gas worries? Read This

By H. STERLING BURNETT

Every time oil prices rise for an extended period, the news media issue
dire warnings that a crisis is upon us --- it's not!

Many factors are contributing to the currently high gas prices:
limited refining capacity; political restrictions on development of new
domestic sources of oil; reduced supply from several oil exporting
countries due to political conflicts; limited supplies due to the
actions of the oil cartel OPEC; and finally, increased demand for oil in
China.

Dwindling supplies of oil are not a factor in the current price at the
pump.

New technologies continually increase the amount of recoverable oil, and
market prices --- which signal scarcity --- regularly encourage new
exploration and development.

The history of the petroleum industry is one of predictions of near-term
depletion, followed by the discovery of new oil fields and the
development of technologies for recovering additional supplies.

Before the first U.S. oil well was drilled in Pennsylvania in 1859,
petroleum supplies were limited to crude oil that oozed to the surface.

In 1855, an advertisement for Kier's Rock Oil advised consumers to
"hurry, before this wonderful product is depleted from Nature's
laboratory."

Indeed, seven oil-shortage scares occurred before 1950.

Predictions of an oil famine during the Arab oil embargo in the 1970s
were followed by a glut of cheap oil.

World oil production continued to increase throughout the 1990s.

While prices have periodically spiked, oil prices fell to an
inflation-adjusted 30-year low in 2001.

Estimates of the world's total oil endowment have continually grown
faster than humanity can pump petroleum out of the ground.

In 1920, the U.S. Geological Survey announced that the world's total
endowment of oil amounted to 60 billion barrels.

By 1950, the estimate had increased to around 600 billion barrels.

The most recent estimate was of a 3,000 billion-barrel endowment.

By 2000, 900 billion barrels of oil had been produced.

If world oil consumption continues to increase at an average rate of 1.4
percent a year, and no further resources are discovered and no
improvements are made in the technology used to recover oil, the world's
presently known supply will not be exhausted until 2056.

These estimates do not include unconventional oil resources that require
additional processing to extract liquid petroleum.

Oil production from tar sands in Canada and South America would add 600
billion barrels to the world's supply, and rocks found in Colorado, Utah
and Wyoming alone contain 1,500 billion barrels
of oil.

Worldwide, the oil-shale reserves could be as large as 14,000 billion
barrels --- more than 500 years of oil supply at year 2000 production
rates.

It is true that in the long run, an economy that uses petroleum as a
primary energy source is not sustainable.

However, sustainability is a chimera.

Every technology since the birth of civilization has been replaced as
people devised better and more efficient technologies.

The history of energy use is largely one of substitution.

From wood and whale oil in the 19th century, to coal by the 1890s. Coal
remained the world's
largest source of energy until the 1960s.

No one can predict the future, but the world contains enough oil to last
beyond 2100.

Only fools would try to anticipate what energy sources our descendants
will use that far in the future.

Over the next several decades the world likely will continue to see
short-term spikes in the price of oil, but these will be caused by
political instability and market interference ---
not an irreversible decline in supply.