A Reader's Response to We Will Never Run Out of Oil

Here's another reader response to my controversial article "We Will Never Run Out of Oil". Is it just me, or are a lot of people looking forward to the day we "run out of oil" and "our economy will tank"?

As an aside, I'm not "prepared to vote for a Democrat" since I'm a Canadian citizen.

Here's the letter, completely unedited:

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Your analysis is flawed because:

1. You presume that oil is only used for pleasure driving in automobiles. In fact, petroleum is used for virtually everything in our modern society. This includes basic necessities such as food, clean water and shelter. So when the price of oil goes up, the price of EVERYTHING goes up.

2. The critical event is not when we run out of oil, it's when available global supply flattens then declines while demand continues to increase. When that happens, our economy will tank.

3. Yes, it will be a slower and more gradual decline than the embargos of the 1970s. However, we all knew that shortage was temporary. What happens when all the speculators and money changers realize that this is now a real shortage that will only get worse and never get better. That's right -- panic on Wall Street my friend.

4. Yes, we can hope for a petroleum replacement. But from a business perspective oil companies make more money in the short-term by milking a cash cow than investing in long-shot new energy technologies. As supply shrinks and prices rise, that means more revenue and lower production costs. Cha Ching! So much for the free market solving this problem, huh?

5. If existing energy companies don't tackle this problem, then other companies will step to the forefront -- you say. Don't count on it. The infrastructure that supports production and delivery of petroleum products to consumers is vast. No one company can replace it. Unless the existing infrastructure is replaced, no company will take the financial risk to invest in petroleum alternatives without a way to deliver and support the use of the product.

6. That leaves Big Government to save the day. You don't mention that oil defies normal economics because it is a strategic resource and thus subject to geopolitical events. All World Wars have been determined by access to oil. Most of the available oil reserves happen to be in the Middle East now -- the birthplace of three major religions on earth and hotbed for religious radicalism. Cruel joke by God isn't it? Since it's the government's job to protect our economy, that means protecting access to Middle Eastern oil. Gee, I wonder why we are in Iraq now. That bill is 160 billion and climbing. While the Bush administration is investing 1 billion in alternative energy right now. When looking for the truth, follow the money. These facts lead one to conclude that our fearless leaders plan to fight for the last drop of oil instead of invest in alternative, renewable energy.

I hate to be such a downer. But there is hope. If we get a democrat in office who has seen the horrors of war first-hand then maybe he will seek to avoid war for oil. Maybe he will realize that short term economic pain will be worth the sacrifice to get us out of this dangerous dependence on oil. That guy would be John Kerry. Are you ready to vote for a democrat and help save our collective butts?

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