Note to Presidential Candidates II: Plateau Oil

Dick Cheney famously called conservation a lifestyle issue, but the pragmatist’s case for sharply reduced demand for gasoline keeps getting stronger.

Quite apart from security and environmental issues, the folks who have the oil have made it plain that they’re not able or willing to produce more simply because China and India are growing gangbusters, and Americans wish to drive SUVs.

That is, Russia, Saudi Arabia, Venezuela, Kazakhstan and so on – the nations whose state-owned companies control more than 80% of the world’s known reserves – are placing a deliberate restraint on supply, as Ed Crooks blogged yesterday at the FT.

It's partly why some oil company chairman are predicting an "oil plateau" -- a production level of 100 million barrels of oil or so a day that simply won't be regularly exceeded. That's just 20% above the 87 million barrels a day produced now.

I raise this in part because of an article posted yesterday by The Economist, titled “Peak Nationalism.” The piece identifies the above-noted countries as part of the supply problem. For some reason, they don’t want to suck their fields dry. But, the magazine says, “politicians might console themselves with the thought that even the most recalcitrant petro-regime is more malleable than the brute realities of geology.”

The ordinarily sensible Economist has somehow missed the last 35 years of history, in which what it calls “politics” have played an integral role in the world’s oil supply. The policies of nations – in the West and the Middle East – influence both demand and supply. And petro-states see it in their own best interests to stretch out the income stream into the next generations.

That’s not recalcitrant. That’s rational.

It's a central issue for the U.S. presidential candidates. A previously election-oriented post urged more attention to Russia and its oil pipeline policy in Europe. This is a corollary issue. Even higher mileage requirements for vehicles, accelerated retooling of Detroit, more encouragement of non-carbon energy technology all are needed.

At some point, someone will inform Washington that ethanol, while it does satisfy the lobbies of the corn-growing states and their companies, isn't the future. But there could be an answer in the laboratories of Big Oil and the Silicon Valley.

Here's a brief rundown from CNN on the main candidates' positions on energy.

Photo: Nick Stenning
Rights: Creative Commons