January 5, 2024 - 2:00pm

It is an unavoidable fact that our economic wellbeing usually depends, directly or indirectly, on supposedly “boring” issues. Talk about supply chains may seem dry, but the global economy is kept running by the consumption of around 100 million barrels of crude oil per day. Without this, the world as we know it would come to a screeching halt, economies would collapse, and millions of people would suffer shortages in essential supplies. No matter how often politicians repeat the mantra of  “phasing out fossil fuels”, they all know that the oil-based global economy is far from coming to an end.

With this in mind, there has been much discussion this week of the “overconsumption” of oil as Houthi attacks in the Red Sea threaten global trade. This argument is misjudged: the world will not run out of oil, and there is a convincing case that “peak cheap oil is a myth.” The bad news, however, is that the world will also not run out of suicidal policy proposals, from demands to “just stop oil” to the slowing down of natural gas exports. More often than not, limitations are imposed not by the laws of physics but by the laws of politics. 

Take Venezuela, for instance. With an estimated 300 billion barrels, the country has the largest proven reserves of crude oil in the world, but due to political instability not enough of the supply makes it to the market. Another example is the shale revolution in the United States, which has turned the country from a net importer to a net exporter within 15 years

What’s more, there is no end in sight. In the 21st century we think about technological revolutions through names such as Google, Meta and AI, but the world’s leading energy producers are technological innovators in their own right. The time it takes to drill an average well has decreased by 40% over the last three years, and output from existing wells can be increased by the process of refracking, which quite literally squeezes the last drops out of known deposits. 

The Western Hemisphere is already outproducing the Middle East, which in the public imagination remains synonymous with oil wealth. If Argentina, with pro-fossil fuel Javier Milei as President, ramps up production and European nations such as France, Germany and the UK give up their fracking bans, Middle Eastern and Russian oil would become even less important. The much-discussed Opec+ supply cuts are not a sign of strength, but instead of panic.

The potential for human flourishing is not limited by the resources nature still has in store for us. The same, however, cannot be said of misguided policy decisions which artificially constrain what would still be available in abundance.