Let's start discussing two very commonly held wrong perceptions even by people with seemingly astute knowledge of current affairs and history.
a) "We will soon build a world order that will be free of oil and gas politics." Oil and gas politics and intrigue are here to stay for a long time and has been with us for a while, primarily since World War I. The truth is that current or any administration in USA does not control oil politics contrary to lot of hyped coffee house talk we all hear around. Thirty-forty years from now, maybe we will be a hydrogen economy (the best-case scenario in terms of alternate energy) but most probably that it will be through derivative process of natural gas. Who are the top four countries that have the most reserves in natural gas: a) Russia, b) Iran, c) Qatar, and d) Saudi Arabia? In any case, the stock of OPEC as a whole is on the rise during 21st century. If tar sands become viable commodity anytime soon, then Canada will be in the mix too for oil and gas politics as an added major power broker.
A new player in the game is China in the way they are aggressively leasing exploration and production rights all over the world and buying other companies. On the other hand, India, Pakistan, and Iran are signing on a giant gas pipeline deal. There is talk of another pipeline through Turkmenistan, Pakistan to India for natural gas.
To a great degree, the US hands are tied. They are in the high stakes game and there is no way out, only a smarter way to play the game and perhaps conservation is just one route - one that can be achieved through some self-discipline.
b) "Oil will almost never cost less." History will tell you that oil and gas is the most fickle commodity. The pricing of oil is done through futures market and even the slightest perception that the inventories in USA are glutted and/ or China and India will not sustain the current growth, the price will be tumbling down to rock bottom in six months. In 1998-99, the price of crude had plummeted to ~$10/ barrel and most of the aggressive exploration and production in many parts of the world except Saudi Arabia was deemed unprofitable for nearly three years. In 1998-99, part of East Asian economy had slowed down. The price of oil is neither controlled by Saudi Arabia or USA only - a host of factors play into supply and demand equation, like state of world economy, Russia, Venezuela, Norway, Mexico, emerging technologies, etc.
Rockefeller with Standard Oil tried his best to control the pricing of oil but failed most of the time even though he became very rich in the process. I do not think at present the oil companies wield that kind of power anymore. I would encourage the students of politics and world affairs read "Prize: The Epic Quest for Oil, Money & Power" by Daniel Yergin. Oil industry has made more people from pauper to prince to pauper again than any profession. However, the general consensus by the pundits is that in bigger picture and long run, the oil will cost more in future barring a number of ups and downs (quite ruthless ones) because the cheaper oil is depleting very soon.
End Note: The article was written before much publicized CNOOC's offer for Unocal.
Before you get all flustered about CNOOC's bid for Unocal, read the following three articles and make up your mind then.
Main Entry: 1flus·ter
Inflected Form(s): flus·tered; flus·ter·ing /-t(&-)ri[ng]/
Etymology: probably of Scandinavian origin; akin to Icelandic flaustur hurry
1 : to make tipsy
2 : to put into a state of agitated confusion : UPSET
intransitive senses : to move or behave in an agitated or confused manner
synonym see DISCOMPOSE
- flus·tered·ly adverb
The global demand for oil is steadily increasing 1-2 % a year. In face of growing demand and the new exploration not keeping pace with our "thirst", perhaps we should ask ourselves:
1) When will oil production peak world wide? Remember, peak oil doomsters are dime a dozen.
2) Do we have alternate sources in sight that can replace oil in the current energy budget in future in an economically viable manner. Right now, 40% of US energy needs are met by oil. I think that natural gas is the best candidate.
3) How sensitive is the earth's climate to carbon dioxide emitted by fossil fuels?
What Can Replace Cheap Oil--and When?
Richard A. Kerr and Robert F. Service, Science, July 1, 2005.