David Frum: Don't Worry About Running Out of Oil

[Minstrel Boy]

Note: Frum has written this today for Toronto's National Post, but it does not exist complete online for non-paying subscribers. (The partial link is here.)


Don't worry about running out of oil

by David Frum
13 January 2005
The National Post


Many of us think of the world's oil reserves as a finite resource: There's only so much there, and when it's used up, there won't be any more. But as one of the world's great oil economists, M.A. Adelman, has observed, this way of thinking is all wrong. Oil reserves, Adelman writes, "are no gift of nature. They are a growth of knowledge, paid for by heavy investment."

The world's oil supply of oil is not finite. It is more like a supermarket's supply of canned tomatoes. At any given moment, there may be a dozen cases in the store, but that inventory is constantly being replenished with the money the customers pay for the cans they remove, and the more tomatoes that customers buy, the bigger an inventory the store will carry.

...

In this new era of expensive oil, the process of substitution will accelerate. It may reach too into growing markets such as India and China. As it does, oil in the ground may become less valuable. And we will move closer to the day when M.A. Adelman's ultimate prediction comes true: As consumers substitute other energy sources for oil, oil in the ground will gradually become less valuable and producers will gradually lose interest in searching for more.

The world will never run out of oil. It will just stop using it. When that happens, the world will never know and never care how much oil remains in the Earth.