April 14, 2012

The Future of Oil

/TIME, April 9, 2012, Page 22-29/

Introduction

   Japan is consuming oil for generating electricity at the highest rate ever before, because of suspending almost all nuclear power plants after last year’s nuclear disaster. Meanwhile, the oil price is marking the highest level in the modern history. Those facts mean that Japan has to analyse the world’s oil economics and politics, and decide whether to stay the same energy policy, or change it to find the alternatives. 

Briefing

   The oil price has been historically unstable for several reasons. About 40 years ago, the oil supply was dominated by meddle eastern countries, and the price fluctuated along their diplomatic policies. But recently, the oil price is affected by quite different factors.

   Geopolitical factors is very influential. Middle eastern countries and Russia contain the plentiful oil stocks, and they used to adjust their supply just as the oil price changes until the world economic crisis. But now, they can no longer afford to work in such a way, and they are selling at the full throttle.

   The world economy has changed entirely in a few decade. China has arose as the world’s largest oil consumer and pushed up the total oil demand. On the other hand, there are new oil fields found in Canada, Brazil, and the U.S. by the development of drilling technology. However, these oils take much costs to pump up the ground and contain a high risk of an accident. 

   At this moment, oil is very expensive, because of political insecurity in the middle east and of China’s increasing consumption. This situation is boosting the investment into the oil industry in new suppliers like Brazil, which might break the tight balance of oil economy and cause its collapse. 

Opinion

   As this article says, the oil market has a nature of instability. This means Japan has to shift to other energy sources as soon as possible in order to cope with the risk of the dependence on oil. Then, following question is whether to re-introduce nuclear power or reject it. But the discussion about this problem is stuck. I wonder how long we have to take the risk of using oil.