The international price of oil

Henry Thompson

The world will not run out of oil or natural gas any time soon. The international price of a barrel of oil has ranged from $40 to $150 over recent years due to demand shifts, delivery problems, refining constraints, improved exploration techniques, new hydraulic fracturing technology, erratic energy policy, and unreliable government management of reserves.

Annual worldwide consumption is about 25 billion barrels. Proven reserves are enough for 120 years of consumption even without new reserves, improved technology, or economizing due to rising prices. Reserves will be only half depleted with prices tripling after a century. Potential reserves extend for many centuries. Any short term increase in price is due to problems above ground.

Governments own most of the mineral rights in the world. Environmental policies restrict energy development. Investors in alternative energy lobby for subsidies, and for taxes on hydrocarbon energy. The unpredictable changes in the price of oil and gas are due to more to politics than to the economics of depletion.