Oil markets expected to tighten in coming years

Jim Angle:

All over the world, more people are buying cars and using gas as growth in the global economy increases the demand for fuel. Likewise, oil supplies are projected to get tighter and tighter. 

"China was at 5 million barrels a day in 2005. Today, they are at 10 (million). By 2015, they are going to be at 15-million-barrels-a-day demand," said John Hofmeister, former president of Shell Oil and founder of Citizens for Affordable Energy. "That's 10 million new barrels over 10 years. India is going from 4 to 7 (million) in the next three to four years."

President Obama recognizes the coming explosion in demand. 

"China and India, they're growing. China added 10 million cars in 2010 -- 10 million cars just in this one country," Obama said last week. "And they're just going to keep on going, which means they're going to use more and more oil." 

The president, however, argues that more drilling is not the way to protect the U.S. Instead, he wants to wean the U.S. off oil by turning to alternatives, such as electric cars. 

"If we want to stabilize energy prices for the long term and the medium term, if we want America to grow, we're going to have look past what we've been doing and put ourselves on the path to a real, sustainable energy future," he said. 

The problem is, most analysts say, the transition to alternatives takes far longer than more drilling would. 

"And we have a capital stock of hundreds of million of vehicles," Guy Caruso of the Center for Strategic and International Studies said. "So these types of transformations take decades and maybe even 50 to 60 years." 

Though the president talks about drilling, official government figures show he is issuing far fewer permits on federal land than his predecessor. 

At the end of the Bush years, 6,000 to 7,000 permits a year were issued, but under Obama the numbers have dropped significantly to a range of 4,000 to almost 4,500 a year.

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I have been making the point that it will take longer to develop alternative energy than it will to start production in places like ANWR.  Unfortunately people like Obama see this as an either or proposition despite their rhetoric of all the above energy policies.  With the growing demand we would be foolish to follow the Obama policy of hoping for a change.  Electric cars are not the answer to the problem for the vast majority of drivers.   Nor are high speed trains.  We are going to need to exploit our oil and gas resources.