New oil find should spur thought

For those who worry that the earth is running out of oil, the discovery of a vast new petroleum reserve deep below the Gulf of Mexico is an important lesson about human beings’ ability to adapt to a changing world.

The question of how much of the world’s oil remains to be pumped has become the rage, but the debate generally fails to acknowledge the experience of history that human ingenuity can reshape any situation’s dynamics.

Consider the historical record that the cost of virtually every commodity, when adjusted for inflation, has decreased over time. To be sure, there are short-term blips that may temporarily move prices up, but the overall downward trend then resumes.

This has occurred because people learn to produce raw materials and goods more efficiently. Often those advances came from new technology that was the result of human ingenuity.

Oil is an obvious example of this dynamic at work, but not the only one.

Remember the dire predictions of some in the late 1960s that the earth was running out of food? They feared a growing world population would gobble up the existing food supply, leading to widespread famine and food riots.

Obviously, those predictions did not come true, and the reason was that technology made farming more efficient and productive. The shortages that occurred stemmed from distribution problems, not a shortage of food.

Those incorrect predictions in the 1960s about food were replicated in the late 1970s when President Jimmy Carter donned a sweater and turned down the White House thermostat in response to gloom and doom scenarios of depleted oil reserves leaving us shivering in the dark.

That was almost 30 years ago, and even with the steep jump in the price of oil resulting in $3 a gallon gasoline earlier this year, that figure still represents an increase well below the overall inflation rate. In other words, since the late 70s, the prices of bread, butter and booze have risen much more than the cost of gasoline or heating oil.

Yet even with that lesson of history, there is concern that since petroleum and natural gas are fossil fuels, the world may be reaching the end of its finite supply and we could be paying $100 a barrel for oil.

Efforts to conserve the existing supply are necessary and worthwhile, and there are questions about the environmental impact of continuing to burn fossil fuels. But the notion that existing known reserves are all we will ever have is challenged by the recent discovery 280 miles southwest of New Orleans.

Of course, even if the optimistic view of this deep-water location turns out to be correct, the potential 15 billion barrels doesn’t mean that we as a nation can forget about the need to develop alternative energy. Fifteen billion barrels is still a pittance compared to the vast reserves below Middle Eastern nations who are less than friendly to the United States. But it would represent a 50 percent increase in U.S. oil reserves.

However, the importance of this find goes far beyond the barrel count. This oil is more than five miles below the ocean surface. A decade ago it was unthinkable that engineers could recover these resources in a way that would be economically feasible.

Now, to be sure, the escalating price of oil is a factor in making this new discovery financially worthwhile. But absent a collapse in the high-flying Chinese and Indian economies, it is hard to see the increased demand for energy allowing the price of oil to return to the good-old days.

But the real difference is that new technology allowed the companies to get oil so far down. Obviously this discovery will set off new rounds of exploration, not just in the deep waters off the U.S. coast but around the world.

It will be years until we know how much more oil will be found. But it would be just as foolish as needlessly wasting energy to make public policy based on the notion that we are going to be running out of fossil fuels anytime soon.