Cheap Oil to Last, "Doomsday" Fears Overblown, Author Says

Brian Handwerk
for National Geographic News
February 14, 2007

Is the era of cheap oil really at an end? Or could a glut send prices into a freefall? Should Western countries fear energy blackmail from oil- rich powers?

There's no crystal ball to predict oil's future, but Leonardo Maugeri believes that much can be learned by looking at the industry's past.

Maugeri is the author of The Age of Oil: The Mythology, History, and Future of the World's Most Controversial Resource. As a senior vice president at the Italian oil corporation Eni SpA, he's also an oil-industry insider.

In his book Maugeri explains how prices affect the cycle of oil production and why he believes oil "doomsday theorists" are tapping an empty well.

Maugeri's theories often challenge conventional wisdom but are likely to become an essential part of the debate on oil's future.

He discussed his controversial ideas in an interview with National Geographic News.

Some experts believe we're at or near a point where world oil supply will be unable to meet demand—with potentially devastating consequences. Are we close to this point of "peak oil"?

It's so seductive, in a way, to speak of a coming catastrophe—but we're not on the brink of a catastrophe.

People usually assume that the planet is thoroughly explored [for oil], but this is not true. The United States and Canada are the most thoroughly explored, and the latest discovery by Chevron in the Gulf of Mexico demonstrates that they are not really so [thoroughly] explored.

Other parts of the world are really not explored at all. Even today more than 70 percent of the world's oil exploration wells are concentrated in the U.S. and Canada—countries that hold only 3 percent of the world's oil reserves. Conversely, only 3 percent of the world's exploration wells are drilled in the Middle East.

Many countries, Saudi Arabia in particular, have discovered oil fields in the past but have never developed them because of their fear of creating excess capacity.

No one knows how much oil there is. But all the hints we have—for example surveys made the U.S. Geological Survey—indicate that the world still has really huge oil resources in its soil.

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