Economics: The End of Cheap Oil

"In our Lifetime" says enconomist Robert Kaufmann, "We will have to deal with a peak in the supply of cheap oil - That peak will be a watershed moment".

I have borrowed the June 2004 National Geopgraphic Magazine from my Father-in-Law for reading on the train which had a great article entitled "The End of Cheap Oil".

Six interesting points caught my attention:

1. The world's oil addiction is hastening a day of reckoning. Humanity's way of life is on a collision course with geology—with the stark fact that the Earth holds a finite supply of oil.
2. The flood of crude from fields around the world will ultimately top out, then dwindle. It could be 5 years from now or 30: No one knows for sure, and geologists and economists are embroiled in debate about just when the "oil peak" will be upon us. But few doubt that it is coming. "In our lifetime,"
3. The abundence of oil means that for now that oil is cheap (Underpriced) - in the USA gasoline is cheaper than bottled water- making it too cheap for most people to bother conserving.
4. The cost of gasoline does not consider the true (hidden) costs of oil such as Leaking oil from refineries, macroeconic disruptions (eg unemployemnt from the true cost of oil), global warming, pollution, traffic accidents, congestion and time in traffic.
5. Canada has an abundance of non-conventional oil in tar pits.
6. Oil is a freak of geology - the product of a series of "lucky breaks" over millions of years. the first break came in a life rich ancient sea: sediments buried the organisc material raining down on the sea floor faster than it could decay. The next break: Eons later the seafloor sediments ended up at just the right depth - generally beyween 7,500 and 15,000 feet - for heat and pressure to slow cook the organic material into oil. [Sounds like a miracle or the result of a global flood or both to me].

"People should be doing something now to reduce oil dependence" says physicist Alfred Cavallo...."And not waiting for Mother Nature to slap them in the face".

It makes me think that

• The choices we make now will impact the inheritence of future generations (Ex 34:7).
• People never value things that are under priced and globally subsidised whether it be oil, water or school teachers. (The price of everything should reflect its true value and then things are to be subsidised to help those who genuinely need it ie. The widow and the orphan).
• That we may well be remembered as a cancerous, selfish, inconsiderate generation.
• We all have the power to make choices now - even simple lifestyle choices.
• The right choice always seems to require sacrifice.
• It starts with me.

• I need to 'lighten up' - OK I'm off to watch Australian Idol like the rest of the nation :-)