Lynne Kiesling and Don Boudreaux have already pointed to an article by Morris Adelman, who was at MIT back when Krugman and I were in grad school there.
There is not, and never has been, an oil crisis or gap. Oil reserves are not dwindling. The Middle East does not have and has never had any “oil weapon.” How fast Russian oil output grows is of minor but real interest. How much goes to the United States or Europe or Japan — or anywhere else, for that matter — is of no interest because it has no effect on prices we pay nor on the security of supply.
...Think of it this way: Anyone could make a bet on rising inground values — borrow money to buy and hold a barrel of oil for later sale. With ultimate reserves decreasing every year, the value of oil still in the ground should grow yearly. The investor’s gain on holding the oil should be at least enough to
offset the borrowing cost plus risk. In fact, we find that holding the oil would draw a negative return even before allowingfor risk.
To sum up: There is no indication that non-opec oil is getting more expensive to find and develop. Statements about nonopec nations’ “dwindling reserves” are meaningless or wrong.
Read the whole piece.
For Discussion. In whose interest is it to have us believe that the world is running out of oil?