The Challenges of Oil
And so another year begins. I spotted two interesting articles in the New York Times over the weekend, which together illustrate some of the key challenges facing the world as we continue to seek new sources of petroleum. The first, from Sunday's front page, highlights the challenge of access for the international majors seeking to offset production declines in the mature parts of their portfolios. Libya is probably the best prospect available, given the restrictions in the Middle East and the concerns about rule of law in Russia. But as the article suggests, it won't be easy, and the removal of international sanctions hasn't created the yellow brick road, exactly.
The second article, from Saturday's business section, focuses on the impact of oil revenues on the countries producing it. Norway is often held up as an example of how this can be done without causing massive corruption on the one hand, or "Dutch Disease"--the enervation of the non-oil domestic economy--on the other. The temptation to use Norway's sequestered oil funds, which are growing rapidly at current oil prices, on projects other than the intended bolstering of social security must be enormous.
For someone who tries to think about the long-run implications of issues, reducing the leverage of dodgy states such as Libya and the economic distortions associated with oil wealth are powerful non-environmental arguments for increasing our use of renewable energy.