The oil Peak: Turning point : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

The oil peak:Turning point

by C.J. Campbell

President Bush has announced that the U.S. faces an intractable energy crisis, and his Secretary of Energy warns that the crisis may affect the entire American economy and way of life. There have been several short-lived price shocks in the past that led to recessions, but this time the world faces something new, different, permanent and much more serious. The fundamental driver of the 20th Century’s economic prosperity has been an abundant supply of cheap oil. At first it came largely from the U.S., but discovery peaked around 1930, leading to a corresponding peak in production some forty years later. The focus of supply then shifted to the Middle East, as international oil companies tapped its vast resources. However, oil companies soon lost their control in a series of expropriations as the host governments sought a greater share of the proceeds. In 1973, some Middle East governments used their control of oil as a weapon in their conflict with Israel over its occupation of Palestine, giving rise to the First Oil Shock that rocked the world. The international oil companies, anticipating these pressures, had successfully diversified their supply before the shock, bringing in new productive facilities in Alaska, the North Sea and elsewhere. These deposits, many of which were offshore, were more difficult and costly to exploit, but production was rapidly stepped up when control of the traditional sources was lost. The industry found and produced the expensive and difficult oil from the new deposits at the maximum rate possible, leaving the control of the abundant, cheap and easy oil in the hands of the Middle East, which was accordingly forced into a swing role, making up the difference between world demand and what the other countries could produce. It was contrary to normal economic practice, concealing the impact of gradual depletion and rising cost, which would otherwise have alerted us to the impending shortages.

-- Martin Thompson (, July 14, 2001

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