Colin J. Campbell
The fundamental driver of the 20th Centuryís economic prosperity has been an
abundant supply of
cheap oil. At first, it came largely from the United States as it opened up its
extensive territories with
dynamic capitalism and technological prowess. But U.S. discovery peaked around 1930,
which inevitably
led to a corresponding peak in production some forty years later. The focus of
supply then shifted to the
Middle East, as its vast resources were tapped by the international companies. They
however soon lost
their control in a series of expropriations as the host governments sought a greater
share of the proceeds. In
1973, some Middle East governments used their control of oil as a weapon in their
conflict with Israelís
occupation of Palestine, giving rise to the First Oil Shock that rocked the world.
The international companies, anticipating these pressures, had successfully
diversified their supply
before the shock, bringing in new productive provinces in Alaska, the North Sea,
Africa and elsewhere.
These deposits were more difficult and costly to exploit, but production was rapidly
stepped up when
control of the traditional sources was lost. In part that was made possible by great
technological advances
in everything from seismic surveys to drilling. Geochemistry and better geological
understanding made it
possible to identify the productive trends, once the essential data had been
gathered. The new knowledge
showed both where oil was and where it was not, reducing the scope for good
The industry found and produced the expensive and difficult oil from the new
provinces at the
maximum rate possible, leaving the control of the abundant, cheap and easy oil in
the hands of the Middle
East OPEC countries. The latter were accordingly forced into a swing role, making up
the difference
between world demand and what the other countries could produce. It was contrary to
normal economic
practice and concealed the gradual impact of depletion, growing shortage and rising
cost, which would
otherwise have alerted us to what was happening.
But these new provinces faced the same depletion pattern that had already been
demonstrated in
the United States. The larger fields, which are found and exploited first, gave a
natural discovery peak.
Advances in technology and operating efficiency also reduced the time-lag from
discovery to the
corresponding production peaks. Whereas it took the United States forty years, the
North Sea, which is
now at peak, did it in just twenty-seven.

//cont at

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