Energy Supplies in the 1970's: Abundance vs Scarcity -- The Issue of Prices

American Institute of Mining, Metallurgical and Petroleum Engineers Inc. This paper was prepared for the 45th Annual Fall Meeting of the Society of Petroleum Engineers of AIME, to be held in Houston, Tex., Oct 4–7, 1970. Permission to copy is restricted to an abstract of not more than 300 words. Illustrations may not be copied. The abstract should contain conspicuous acknowledgment of where and by whom the paper is presented. Publication elsewhere after publication in the JOURNAL paper is presented. Publication elsewhere after publication in the JOURNAL OF PETROLEUM TECHNOLOGY or the SOCIETY OF PETROLEUM ENGINEERS JOURNAL is usually granted upon requested to the Editor of the appropriate journal, provided agreement to give proper credit is made. provided agreement to give proper credit is made. Discussion of this paper is invited. Three copies of any discussion should be sent to the Society of Petroleum Engineers office. Such discussions may be presented at the above meeting and, with the paper, may be considered for publication in one of the two SPE magazines. Introduction In the past, the energy consumer in the United States in peacetime has faced no genuinely inconveniencing shortages of energy supplies. On the contrary, fuels have generally been abundant. But recently there has been much concern expressed in regard to prospective shortages of major energy sources. Fears were earlier voiced concerning an impending shortage of natural gas, and there are many who foresee declining supplies in the future, which will leave an increasing deficit for gas needs in view of the rapidly rising trends being projected for demand. And although some excess projected for demand. And although some excess producing capacity exists currently for crude producing capacity exists currently for crude oil, the level is apparently declining and in any event when realistically estimated compares unfavorably with volumes of imported oil. Furthermore, proved reserves of oil have been declining for several years, and trends in new discoveries per unit of exploratory effort have remained at disappointingly low levels for over a decade. More recently, concern has been registered in regard to coal supply, as some buyers have experienced difficulties in meeting their requirements. Until recently, concern over impending energy shortages was limited largely to those who were immediately affected by them. But the number so affected was increased sharply by the severing of the Aramco Tapline in May 1970, and the sudden major restriction of crude oil output ordered by Libya the following month. These two actions, which reduced oil availability by over a million barrels per day, brought to the attention of many energy consumers the degree of precariousness in the energy supply equilibrium currently established. IMPLICATIONS ON ENERGY SUPPLY These actions however, are only the most highly visible factors in a pattern of developing supply shortages, and serve primarily to throw into sharper focus the somewhat longer run implications for energy supplies of a combination of economic forces and administrative actions which have created latent scarcities of several important fuels.