This is an interesting article (registration required) from the European Energy Review about thoughts on the future oil-energy world. The author, Matthew Hulbert, mentions no importance of the United States on future oil production — this in spite of the fact that the United States most likely has the largest oil reserves of any country, including Saudi Arabia.
That’s possibly because the United States’ obsession with biofuels — such as ethanol from corn and the vast oil savings attributed to a few thousand electric cars — have led Hulbert to think rational action from the United States is unlikely.
Other factors may be how President Obama’s response to high oil prices was to have the Justice Department investigate oil price manipulation and suggesting removing tax incentives to drill for oil in the United States. With the public flogging of BP after the Gulf Oil spill of April 20, 2010, would any oil company really want to step into increasing the United State’s oil production with all its risks and multitude of changing regulations?
President Obama praised increased off-shore oil drilling by Brazil, which can’t possibly have the technical expertise available in the United States, and lays land mines to thwart future off-shore and on-shore drilling in the United States. Ask Shell Oil Company about its problems attempting to drill exploratory wells off-shore Northern Alaska.
At ant rate, here’s Hulbert’s piece in the European Energy Review. It’s long, but worth a read if you want some insight on the dynamics of the global energy market:
Analysts and decision-makers everywhere are trying to find their bearings in a world that has undergone a radical transformation in just a few months’ time. Matthew Hulbert, Senior Fellow at the Centre for Security Studies (CSS) at the Swiss Federal Institute of Technology in Zürich, draws ten lessons from the recent perturbations on global oil markets plus one grand conclusion: forget about fundamentals. Politics is now what matters in the oil market.
1. The West’s long term ‘swap agreement’ with the Middle East – repression in exchange for oil – is pretty much broken.
This is the first and easiest lesson to draw from the recent political upheavals. The core belief that ruled the world oil order was that when oil prices are high the Sheikhs are safe. This no longer holds water.
Unrest spread when benchmark prices were trading at a healthy $95 per barrel and, as the IEA has pointedly reminded us, OPEC is expected to stuff a staggering $1,000 billion into state coffers by the end of the year should prices remain firm. That kind of figure should have been more than enough to keep octogenarian Arab regimes on life support mechanisms. The fact that it’s not (or will only buy leaders a little more time) means that crony capitalism has failed. It hasn’t created the kind of broad-based buy-in needed to help quell the Arab street.
People see high unemployment, rising inflation, economic hardship, ongoing repression, lack of freedoms and widespread abuse by security and intelligence organizations. They also see elites enriching themselves on the back of soaring oil prices. The grievances are of course not new, but the fact that the Arab street is now willing to do something about them, certainly is. The upshot is that much more will need to be done in the oil countries to stimulate employment and equitable growth. And that means that not only credible (and inclusive) political systems must be put in place and political rights acknowledged, but it will inevitably entail broader control of natural resource wealth as part of the package.
Read the rest here.