Oil Surplus Over, Says Energy Author

Paul Roberts, an energy writer for Harper’s magazine and author of “The End of Oil: On the Edge of a Perilous New World,” warns in the Los Angeles Times, as reported in the Calstart e-mail newsletter, that the days of cheap oil are gone. Oil prices are at $38 a barrel, or about $15 above the two-decade average. Some forecasters are now offering a far less sanguine prognosis: not only will oil stay high through 2005, but the days of cheap crude are history. In the Times article, Roberts says we're seeing the end of a 25-year oil boom, touched off by the oil shocks of the 1970s, which stimulated exploration and production. Oil companies and oil-rich states drilled thousands of new wells, built massive pipelines, developed new exploration and production technologies and generally expanded their capacity to find and pump oil. This surge in capacity eventually brought prices down and helped buffer consumers from subsequent oil crises. Surplus capacity helps explain why oil prices since 1982 have averaged just $22 a barrel. Now, the world's surplus capacity is disappearing. Even as industry worries about supply, global demand is growing far faster than predicted — largely because China's economy has outpaced even Beijing's expectations.