Free The End of Doom by Ronald Bailey Page B

plateau and then potentially decline.”
    All of the energy consumption estimates reported by Newell and Iler incorporate assessments concerning likely improvements in energy efficiency and production technologies, as well as the adoption of subsidies for renewables and prices on carbon dioxide emissions. For example, ExxonMobil’s 2014 Outlook for Energy report assumes that rich developed countries will impose carbon dioxide emissions control measures that amount to “an implied cost of CO 2 emissions that will reach about $80 per tonne in 2040.” Similarly, the consultancy Synapse Energy Economics projected in its 2012 report that carbon dioxide prices would range between $35 and $90 per ton by 2040.
    What will the price of oil be in the future? One can find just about any estimate one wants. For example, in late 2013, Reuters polled twenty leading oil industry experts and obtained estimates for 2020 prices ranging from $70 to $160 per barrel. The International Energy Agency projects that the price of oil will be around $128 per barrel (2012 dollars) in 2035.
    In their analysis of commodity super-cycles, Erten and Ocampo report: “In contrast to these trends in non-oil commodity prices, real oil prices have experienced a long-term upward trend, which was only interrupted temporarily during some four decades of the twentieth century.” This suggests that the price of oil will not likely fall back to its 1998 average of $17 per barrel (2014 dollars). High oil prices have, however, drawn forth substantial investments in new production. Later in this decade, extra supplies of crude will meet weakening demand as the super-cycle decelerates, resulting in falling prices.
    Harvard University analyst Maugeri also argues that recent big investments in production and innovation will enable oil producers to bring an additional 18 million barrels of oil per day to the market by 2020, raising global production to around 110 million barrels per day. “The age of ‘cheap oil’ is probably behind us,” writes Maugeri, “but it is still uncertain what the future level of oil prices might be. Technology may turn today’s expensive oil into tomorrow’s cheap oil.” By cheap oil, Maugeri means the $20 to $30 per barrel price that prevailed during most of the last half of the twentieth century. He believes that the trend toward more production will tend to stabilize the price of oil after 2015. Maugeri’s suggestion that oil prices could dip below $50 per barrel in the near term was realized in January 2015 when the price for benchmark West Texas Intermediate crude hovered around $45 per barrel, but he generally assumes that the price will remain above $70 in the run-up to 2020.
    Despite reassuring petroleum reserve estimates and the downward pressure on prices that increased production and the waning of the current commodity super-cycle generates, a peak oil crisis might still happen. How? Through political mismanagement.

    Political Peak Oil
    â€œThe real problems concerning future oil production are above the surface, not beneath it, and relate to political decisions and geopolitical instability,” notes Maugeri. It is a disquieting fact that government-owned oil companies control nearly 90 percent of the world’s oil reserves and produce about 75 percent of current supplies. Not guided by the profit motive to take future income into account, governments use their state-owned oil companies to plunder petroleum reserves as quickly and as messily as possible, often using oil revenues to buy off restive populations. In the wake of the Arab Spring uprisings in 2011, Saudi Arabia’s monarchy bought social peace by quickly boosting wages by $130 billion; Algeria announced a $156 billion infrastructure and jobs program; and Kuwait gave every citizen $3,600 and fourteen months of free groceries. In addition, tens of billions of dollars generated by government-owned oil companies