EconLog

Realism on Energy, 2002-11-27

Pete Geddes argues that it is unrealistic to expect us to get away from oil and coal as energy sources over the next two decades. He cites a number of market realities, including

The U.S. will remain dependent on imported oil. This is because our reserves have been almost fully explored and developed. Undiscovered oil in ANWR and the Rocky Mountain Front can only marginally increase domestic supply. But even if every drop of oil we consumed came from domestic sources, international shortfalls would raise domestic oil prices. That's because global economic forces ultimately trump regional markets. Thus, regional prices for crude oil match world prices. For example, in 1979, Great Britain - which was totally energy independent due to production from its North Sea fields - had oil price spikes as high as Japan, which imported all of its oil.

Discussion Question. Politicians and pundits say that we need to achieve energy independence as soon as possible. How would you respond?