There is no shortage of oil. There is plenty of oil to be exploited if folks are willing to pay higher prices. Back in the 1970s, economic planners gave Canada 30 years before the depletion of its oil reserves. Nowadays these same economic planners rate Canada on par with Saudi Arabia in terms of untapped oil reserves. Most of this “new” oil has been found in the bituminous-rich sands of northern Alberta. It costs way more to extract and process gasoline from the oil sands. It costs more in terms of carbon dioxide emissions. As well, oil sands operations have released a host of toxic metals into the surrounding soils and waterways. Not only do oil-sands products imply higher consumer prices, they incur health-care costs that consumers will have to pay eventually or roll those costs onto their children and their children.
So that’s the plain truth. There is no shortage of oil. As the demand for oil grows, the total recoverable oil reserves will also grow. The catch is that the price of oil will rise more steeply in the future. Nations that cannot produce enough oil to cover their consumption will pay twice: first at the pumps and second in terms of dependency to the oil-producing nations. Clearly there are good reasons for folks to reduce their consumption of oil. The trouble is that going cold turkey is easier said than done. Ask any alcoholic, coke head or heroin addict: cold turkey is no bed of roses.
Addiction to oil is not merely an individual problem. It is a social phenomena. Oil is entrenched in the urban cultures of the 21st-century. Even vegetarians who recycle their used chewing gum and compost their onion peals must use oil when they drive their cars, fire up their computers or heat their homes in the winter. No one can escape using oil, so the onus is on governments to point the way and set an example.
The best way to do this is to enact a carbon tax. Unlike other proposed methods, a carbon tax doesn’t have loop holes—unless the law makers choose to add them. In other words, a carbon tax is fair. For this reason, the mere mention of a carbon tax has been contested vigorously by oil companies, car manufacturers and oil byproduct makers. Still, a carbon tax will involve less paper work and fewer government regulators. It will simply add to the costs of oil-dependant goods and services. At the same time, the government should relax other taxes, which will encourage other sectors of the economy, which are less dependant on oil and its byproducts. If the transition is graduated over number of decades, the economy will not suffer at all.
A different mix of good and services will come to dominate the marketplace as consumers vote with their pocketbooks. You will see windmills dotting the country sides. You will see high-speed trains and dirigibles grabbing travel dollars from traditional airlines. You will see more folks working at home via wideband intranets. You will watch satellites taking an ever-larger share of global communications. You will see cars that go just as fast and far while using half as much fuel. You will see many wonderful advances no one has yet imagined…