William A. PizerSenior Fellow; Director, Comprehensive Climate Strategies Program - Resources for the Future
2005, No. 2
ONCE AGAIN THE debate has intensified over whether energy as a commodity
is running out. Just six or seven years ago the world seemed awash
in oil, yet today many pundits predict the end of oil and indeed the end of
the fossil-fuel era.1 With its recent merger with the California-based oil
company Unocal, Chevron has placed a bet on ever-increasing oil prices.2
Two other oil giants, BP and ExxonMobil, on the other hand, have publicly
stated that resources appear plentiful.3
Even if the world’s oil resources are indeed plentiful, world energy
supply remains very much constrained. As a world population headed
toward 9 billion strives for a standard of living that the industrialized
nations take for granted, energy demand will increase rapidly, straining
the entire supply chain from exploration to refining. To complicate matters
further, oil and gas resources are concentrated in a small region of the
world, leading to a more fragile and more volatile trading system that
shows strong monopolistic tendencies. In addition to all of this, environmental
concerns pose perhaps the toughest constraint of all.
