Bible holds lessons for future of energy; The Genesis message about preparing for harsh times should be applied to fuel production
July 10, 2013 Leave a comment
July 9, 2013 7:11 pm
Bible holds lessons for future of energy
The Genesis message about preparing for harsh times should be applied to fuel production
The writers of Genesis understood the commodity cycle very well. When the pharaoh dreamt of seven fat cows being eaten by seven lean ones, it was a warning to prepare in the good times for harsher days to come. It is a Biblical lesson that energy policy makers would do well to relearn.
In the global oil market, we are in the fat years. Not only is the US enjoying a fully fledged oil boom, but production is set to grow in Canada and Kazakhstan, Iraq and Brazil. It is tempting to think that we are entering an “age of abundance”, in which concerns about oil security are behind us.The recent surge in US crude to $104 a barrel, driven by concerns about the Suez Canal, has been a reminder that that attitude is dangerously complacent.
As the FT series this week on the outlook for oil has shown, the expected sources of increased supply all face substantial challenges.
In the US, the new reserves being opened are less productive than the shales of North Dakota and south Texas that have powered the boom so far. In Iraq, poor contract terms and infrastructure are deterrents to fresh foreign investment. In Brazil and Kazakhstan, the oilfields are more challenging than anything that the industry has faced before.
As demand in emerging economies continues to grow, eventually oil markets will tighten.
When the cycle turns from abundance back to scarcity again, the transition will be easier if oil consuming countries are ready for it.
First, that means developing their own production. While the US record is outstanding, Europe’s is woeful. Shale oil may never take off in Europe, but muddled and obstructive policies are stifling whatever potential it might have.
Second, it means pushing for greater fuel efficiency. Enthusiasts for efficiency may often overstate its benefits, but the evidence is clear that improved fuel economy can cut oil consumption.
Third, it means backing alternatives to oil. Biofuels may have turned out to be a dead end, but natural gas and electric vehicles have much further to go. Taking a long-term view means supporting renewable and nuclear power, even when in the short term they are uncompetitive against fossil fuels. Energy strategy along those lines would both help curb greenhouse gas emissions, and reduce the economic impact of the next oil shock.
When the lean years come again – which they will – governments will not be forgiven for having ignored the pharoah’s dream.
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