Martin Wolf: get used to high oil prices

Martin Wolf takes the "no speculation here" view on oil this morning in the FT. The main point of the argument is summarized in the top left drawing: namely that compared to the early 70's we are reverting to mean in terms of "price/production", this view basically says "the 85/00" period was a historical aberration. To me the yearly growth charts (the other charts) basically show "supply does not follow demand" although yearly variation could show manipulation and speculation. I would have liked total demand to go along with that information.

From the article:

Fifth, do try to reach global agreement on a pact on trade in oil based on the fundamental principle that producers will be allowed to sell their oil to the highest bidder. In other words, the global oil market needs to remain integrated. Nobody should use military muscle to secure a privileged position within it.

Finally, do become serious about investing in basic research into alternative technologies. Energy self-sufficiency is an implausible goal. Investing for a post-oil future is not.

We are no longer living in an age of abundant resources. It is possible that huge shifts in supply and demand will reverse this situation, as happened in the 1980s and 1990s. We can certainly hope for that happy outcome. But hope is not a policy.

The first 4 points are basically a rehash of "supply/demand" is driving pricing (as opposed to speculation or just dollars). The fifth point is scarier, an earnest call to not use "military muscle" to secure a privileged position... I am tempted to say "too late?".

Obviously research is something I have a personal interest in following. I do believe in a surge of nuclear, the 70's aversion to it is zany and legacy romanticism. I am also a big believer in solar power, both centralized (a la mirror collection in the middle of the desert to heat water tanks and drive turbines like in spain) or more high-tech solutions with solar cells and distributed collection (meaning your home).

Obviously the big out lier is still fusion. It has been on the horizon for the past 30 years but like any mirage moves WITH the horizon, always there, but never REALLY there. I read somewhere, that tens of billions would really enable us to explore options in more depth. Instead of spending 1T on a war to secure oil, we would spend a fraction on research? Oh but blowing shit up is so much more fun.