In a June 29 editorial (registration required) devoted to criticizing energy legislation currently before Congress, The Wall Street Journal lamented “the return of the 1970s mindset that the world is somehow running out of oil.” “In fact,” the Journal countered, “the world's known oil reserves have doubled since 1980, as technology has improved to discover and extract more of it.”
But the Journal's supposed refutation is misleading. Even if “known reserves” have increased, the world could still be “running out of oil” if producers are extracting these reserves faster than they are discovering new ones. And indeed, that's exactly what is happening, according to Washington Post columnist and associate editor David Ignatius's June 29 column, which cited estimates by J. Robinson West, chairman of the energy consulting firm PFC Energy:
West hopes that high prices will drive new exploration and that new techniques will increase recovery from existing fields. But he cautions that there's no sign of any such easy fix. Since 1990 production has outpaced new discoveries in Latin America, Asia, Europe and the former Soviet Union.
Still, if the Journal truly believed -- contrary to Ignatius and West -- that ongoing oil exploration and improvements in extraction techniques will be sufficient to halt or reverse spiraling oil prices, then one would expect its editorial to focus criticism on the billions of dollars in tax subsidies the bill offers for oil and gas producers. Such subsidies constitute 60 percent of the $18 billion in total tax breaks for energy producers in the Senate version of the bill, which passed on June 28. After all, if new oil exploration is already proceeding briskly, such subsidies would be unnecessary. But the Journal was silent on these subsidies. Instead, it singled out only the renewable energy subsidies for specific criticism, lamenting that the bill “repeats most of the subsidy mistakes of the Carter years -- for wind, solar, 'biomass,' you name it.”