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So says Daniel Day Lewis in There Will Be Blood, which was an adaptation of the Upton Sinclair novel, Oil.

Despite sensationalist claims to the contrary, what was true at the turn of the 20th century still rings true today–the world is flush with oil. And the true dilemma is not a lack of the resource, but a limited ability to extract and utilize it.

Here is a Cambridge study covered by Reuters:

World oil production will not begin to fall for at least another 24 years, contrary to doomsday theories that supply is already in terminal decline, a prominent energy consulting group said Tuesday.

Cambridge Energy Research Associates said in a report that the world has some 3.74 trillion barrels of oil left — enough to last 122 years at current consumption rates and triple the amount estimated by “peak oil” theorists.

The world consumes nearly 85 million barrels of oil per day, with the United States using about a quarter of that, according to the Department of Energy.

The report flies in the face of many who have been predicting “peak oil” production being reached for some time now.

The “peak oil” idea was first proposed by the late geologist M. King Hubbert in 1956, who correctly predicted a 1970 peak in U.S. production in the lower 48 states. Hubbert followers have carried forward the theory, applying it to global supplies …

“Peak oil” theorists fail to note that the industry has replaced more oil reserves through field reserve upgrades than from exploration, which has tended to keep production levels steady, Jackson said.

Technological development and geopolitical shifts, more than realities underground, will govern how production unfolds before it begins to decline permanently in the second half of the 21st century, the Cambridge report said.

Some still worry about exhausting our oil reserves–which will (essentially) happen, albeit not for a very long time–and use it as a reason to defer oil usage in favor of “alternative” energies. Even without the recent findings of Cambridge however, the idea strikes me as a silly one that shows a lack of appreciation for the price system.

If we are truly running out of oil then the price will go through the roof. As the global availability shrinks toward nothing the price of oil will be so high that consumers and producers will begin to turn towards substitutes. The increase demand for alternative energies will create incentive for investment in these alternative energies.

And futures markets will have the similar effect of boosting such investment even earlier on.

But, what promoters of energy independence and alternative energy need to remember is that we live in the real world, and the energy we use is bounded by its chemical properties and our capacity to harness them. Simply put, there is a reason that 85% of our energy is the product of fossil fuels: they are presently the most efficient sources.

Now, I am sure that for many hearing me label fossil fuels as “efficient” may seem peculiar. After all, all we here about in the public sphere is that fossil fuels are the antithesis of energy efficient. The disparity is a matter of standards: while the political standard for efficiency may be a matter of popularity or CO2 emissions, the market standard for efficiency is opportunity cost.

When economic actors (rationally) look towards maximizing efficiency, they do so under the constraints of limited capital–both human and nonhuman. Economizing is about maximizing utility per unit of input. Thus, when applied to the sector of energy, people are going to want to produce the maximum amount of energy per the amount resources they invest. So given its potential and all of the technology and capital we have in place to harness it, fossil fuels are the most market-efficient source of energy.

This is why the vast majority of our energy consumption comes from fossil fuels. And it is also why alternative energies are just that–alternative.

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The There’s a whole ocean of oil out there… by New School Politics, unless otherwise expressly stated, is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.