Regarding the editorial, The world needs more oil (OGJ, Jan. 24, 2000, p. 17), a quibble if you please. We have alternated between oil "shortage" and excess for as long as I can remember.
Let the competitive free market prevail. For OGJ to lecture petroleum exporting nations that they should increase production for the benefit of the importing nations strikes a dissonance with market principles. Put yourself in place of those nations or companies with discretionary production capacity: Should you sell a barrel of oil now for, say $11, or sell 0.9 bbl now for $25.20 (0.9 x $28/bbl) and somewhat later sell the withheld one-tenth bbl for an even higher price per barrel?
If we act out of self-interest, the answer is self-evident: restrain production to optimize income. If the oil exporters become intoxicated by their own success and drive prices too high, they are going to stimulate alternate energy production from producers who will demand from their governments guaranteed market protection during the next market downturn. Given our government's history of "special interest" protection, alternative energy producers are likely to be granted such protection.
What alternate energy sources are we refering to? "Heavy oil" and natural gas. Worldwide, heavy oil reserves are very large, larger I believe than conventional oil reserves, and they can easily meet global demand for liquid fuel but at a higher cost than conventional oil. The reason conventional oil now dominates the energy market is because it is the cheapest source of liquid energy. If conventional oil producers allow the prospects for short-term profits to override their long-term interests, they may well destroy large segments of their future market. It would be unpleasant to live in a Middle East exporting nation that finds it has forever lost its market for conventional oil. Could it happen? You betcha.
In any case, the "market" does not concur that we are facing an oil crisis. If the market agreed with the crisis mentality, future contracts for oil would be higher, not lower, than nearby prices.
Now it is true that heavy oil production, and consumption, may have an adverse environmental impact. However, if the environmentalists commence to experience cold homes, cold water showers, and communting by bicycle, they may discover that a little environmental degradation is tolerable after all. Come to think of it, it is nature that is the big environmental despoiler: the salted oceans; the Grand Canyon. If we do truly run short of engineered energy, global warming will look very attractive.
Unfortunately for the environmental alarmists, the global warming threat remains just that: a threat. A threat about as big as the threat of global cooling. If the ice caps are melting, why have not the walkways in Venice flooded? If global warming is real, what accounts for a 24° F. temperature reported this very morning in Tampa? And why did the citrus belt move 20-30 miles south in Florida during the decade of the 1980s because of repeated and vast grove-destroying freezes?
Can it be that we, as a nation, are too prosperous? How else to account for the fact that we generate national political alarm over illusory environmental threats? I don't mean to imply that the environmentalists have been wrong in all their campaigns, but their record is, to put it charitably, spotty. The harm they have done has just about matched the benefits they have produced.
Robert W. Clack
Lake Wales, Fla.
