PASADENA, Calif. (AP) -- It's not the energy crisis that worries
Caltech physicist David Goodstein. It's the economic crisis he fears
it could cause.
Goodstein recently looked at a famous 1950s analysis that
correctly predicted U.S. oil production would peak about 1970.
Expanding the scope, he estimated world production could hit a peak
in 2007 -- decades ahead of previous predictions.
The United States could draw on the rest of the world's supply to
meet its demand when the domestic supply declined in 1970. But when
the world supply peaks, oil will become scarce because "nature is
not making any more oil," Goodstein says.
If government and industry leaders don't push hard and fast to
develop alternative energy sources and the infrastructure to support
them, Goodstein says the world could be pushed over an economic
cliff created by skyrocketing oil prices.
While some experts say Goodstein's scenario is a possibility,
others say he should stick to physics. They point out that estimates
of the world's oil reserves have been increasing over the years, and
contend that alternative fuel sources will be developed before there
is a serious oil shortage.
"This is a classic example of why physicists shouldn't do
economics, just like economists shouldn't do physics," said Stanford
economist Frank Wolak, who has tracked the energy industry for
The oil and auto industries have moved into alternative fuel
research but actual conversion is slow because the price of oil is
relatively cheap, even at today's prices, Wolak says, so there is
little incentive to switch.
Wolak and Goodstein note that a liter of bottled water -- about a
quart -- is more expensive than a liter of gasoline in California.
But unlike Goodstein, Wolak sees a smooth transition to
alternative energy because he says the free market has always
created investment incentives for new technology. He also points out
that higher prices have the effect of increasing exploration and
development of new oil recovery techniques that were too costly at
Besides, Wolak says, supply and demand always find a balance.
"We'll never run out of oil," Wolak says, "because as it becomes
more and more scarce, the price will move to allocate it to those
who need it most."
Michelle Foss, director of the University of Houston Energy
Institute, says oil consumption has typically slowed dramatically
when prices reach about $30 to $35 a barrel.
"If it gets above that, people use a lot less of it," Foss said.
Dan Butler of the U.S. Department of Energy says government
studies show the earliest global production peak arriving some time
in the 2030s, despite an estimated average consumption of up to 120
million barrels a day.
"Estimates of worldwide resources are dramatically increasing,"
said Butler, an analyst for the DOE's Energy Information
Administration, an independent agency that forecasts oil supplies. …