Greedy Americans?
The BBC has an article, ” Norway’s future Arctic oil bonanza,” with an all-too common twist. Set out a story about economic demands vs. the environment:
Both Norwegian and Russian authorities say the potential for future fossil energy exploration here is enormous, while environmentalists warn of the danger to the fragile Arctic environment.
Then point the finger:
The processed gas will be shipped to energy-hungry Americans.
It doesn’t occur to the writer that natural gas is a commodity that is sold on world markets. If demand goes up in China or India or Italy or the US, it affects world prices. Where this or that cubic meter of gas goes is of little import (so to speak).
This is a good example of how articles on fossil energy in the popular press are largely works of fiction. Even five minutes of Googling is enough to poke holes in some of the major assumptions of the article.
Gas reserves have *not* been running out, but have been *growing* steadily. (The authors of the article have no idea what gas reserves are, and so can’t even imagine that this is possible, probably would ask idiotic questions about new dinosaurs if confronted with this fact).
By far most of the growth in world natural gas consumption will come from the non-OECD countries (the developing world). U.S. consumption is expected to grow at about 1% annually as opposed to the 4-4.5% rate for the developing world; but under projections that include reasonable technological improvements, U.S. consumption actually declines somewhat.
There are similar flaws in the petroleum story.
And Tom is exactly right about there being a single world market. If Norwegians sell natural gas to Americans, an increase in Chinese demand for gas raises the price, even if Norway isn’t shipping gas to China. (Opportunity cost is too complicated for BBC to understand.)
These data and projections are from U.S. DOE, which has extensive free studies available, e.g.
True, these are uncertain estimates, with various assumptions built in (and frequently stated explicitly)… but there’s more science and evidence built into them than into the nonsense that BBC writers make up off the tops of their heads.
I have trouble posting links here, but will try again. (A third time)
[http://www.eia.doe.gov/oiaf/ieo/nat_gas.html]
I love that picture, I want to hang it in my office.
Another interesting dimension here is that there is a border dispute between Norway and Russia that concerns areas thought to be large gas fields. The political climate in Norway is such that one will be very slow in extracting gas from these areas if at all should Norway win the dispute (because of environmantal concerns), while the Russians will not hesitate a second to start drilling with whatever technology they may have at hand (this would be the Norwegian view…)
Norway not being member of the EU will have a hard time winning such a dispute with the Russians as ling as both the EU and the US are energy hungry and we are but a small country.
Isn’t that a problem of property rights and how to resolve disputes? What’s the basis of the dispute? Are the borders not clearly set out on a map?