THE COMMANDING HEIGHTS
Whether the end comes in some climactic gurgle or, more likely, in a succession of dizzyingly destabilizing shortages, temporary gluts, and deeper shortages, the oil epoch is ead=. jigg. Iranians know this. Kuwaitis and Nigerians and Vene-IzueTans know it. Saudi Arabians know it—which is why they are racing to build an economy based on something other than oil revenues.
Petroleum companies know it—which is why they are scrambling to diversify out of oil. (One president of a petroleum company told me at a dinner in Tokyo not long ago that, in his opinion, the oil giants would become industrial dinosaurs, as the railroads have. His time frame for this was breathtakingly short—years, not decades.)
However, the debate over physical depletion is almost beside the point. For in today’s world it is price, not physical supply, that has the most immediate and significant impact. And here, if anything, the facts point even more strongly to the same conclusion.
In a matter of decades energy may once more become abundant and cheap as a result of startling technological breakthroughs or economic swings. But whatever happens, the relative price of oil is likely to continue its climb as we are forced to plumb deeper and deeper depths, to explore more remote regions, and to compete among more buyers. OPEC aside, an historic turn has taken place over the past five years: despite massive new discoveries like those in Mexico, despite skyrocketing prices, the actual amount of confirmed, commercially recoverable reserves of crude oil has shrunk, not grown—reversing a trend that had lasted for decades. Further evidence, if needed, that the petroholic era is screeching to a halt.
Meanwhile, coal, which has supplied most of the remaining third of the world energy total, is in ample supply, though it, too, is ultimately depletable. Any massive expansion of coal usage, however, entails the spread of dirty air, a possible hazard to the world’s climate (through an increase of carbon dioxide in the atmosphere), and a ravaging of the earth as well. Even if all these were accepted as necessary risks over the decades to come, coal cannot fit into the tank of an automobile nor carry out many other tasks now performed by oil or gas. Plants to gasify or liquefy coal require staggering amounts of capital and water (much of it needed for agriculture) and are so ultimately inefficient and costly that they, too, must be seen as no more than expensive, diversionary, and highly temporary expedients. Nuclear technology presents even more formidable prob-
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