Peak Oil Part III: Political Implications, Anyone?

[Note: Your full enjoyment of this post will depend upon your having read the post immediately below (Peak Oil Part II) and to a lesser extent the original Peak Oil post]

I am not an economist. Nor am I a petroleum engineer. And yet I have been able, in my spare time, to figure out the stuff below. It isn't some tin-foil-hat conspiracy theory, nor is it based on unreliable or hard-to-find information. This stuff is all pretty basic, and you can bet it is well-known by governments and oil companies.

Certainly it is known by our own government. There is even a bi-partisan Congressional Peak Oil caucus. Certainly it is known by oil companies, because MK Hubbert was a geophysicist working for Shell Oil when he developed the Peak Oil theory over 50 years ago.

Certainly it is known by one Richard Bruce Cheney, who currently serves as Vice President of these United States. In fact, when Mr. Cheney was Chairman and Chief Executive of Halliburton, he gave this speech to the Institute of Petroleum. Mr. Cheney clearly recognizes the importance of oil:

Oil is unique in that it is so strategic in nature. We are not talking about soapflakes or leisurewear here. Energy is truly fundamental to the world’s economy... It is the basic, fundamental building block of the world’s economy. It is unlike any other commodity.

Mr. Cheney clearly recognizes the finite nature of oil and the importance of supply keeping up with demand:

Oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day.

It is worth noting that, according to this admittedly conservative analysis (based on more recent demand numbers, I would say it is very conservative), within a space of ten years we will need to increase production from 70 million barrels per day to 120 barrels per day, an increase of over 70%, in order to meet increases in demand.

Mr. Cheney continues by asking "So where is the oil going to come from?" He then complains that 90% of the world's oil reserves are controlled by state-owned oil companies, and thus unavailable for exploitation by privately owned oil companies. But then he answers his own question: "While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow."

Yes, progress continues to be slow, at least in 1999. But how can we speed up the progress of private oil companies getting access to state-controlled oil in the Middle East?

Oil is the only large industry whose leverage has not been all that effective in the political arena. Textiles, electronics, agriculture all seem oftentimes to be more influential. I am struck that this industry is so strong technically and financially yet not as politically successful or influential as are often smaller industries. We need to earn credibility to have our views heard.

Yes, political influence. You know, I bet by getting yourself and one of your cronies elected to high public office, say, for example, President and Vice President of the United States, might well give you just a bit of political influence.

But once you have this political influence, what, oh what, might you possibly do with it?