British prime minister Gordon Brown says, in a column this week in The Guardian: "...every country must find ways of being more efficient and diversifying supply. And as continuing high oil prices present us all with an immense challenge, the way we confront these issues will define our era."
No kidding. Our era is already being defined by passionate debate on what to do with higher energy prices, which affect every economy in the world. Protests in the U.K., France and elsewhere are increasing as the price of energy heads higher. Like many politicians and pundits in this country, Brown said the U.K. should encourage a greater dialogue between consumers and producers, such as OPEC, in order to maximize supply. As if talk could coax more oil out of a spigot somewhere. Brown said the U.K. should accelerate its development of alternative, renewable energy sources. Easier said than done. At The Guardian's website, Brits complain about high government taxes on diesel--Brown is blamed. They cite the bungled Iraq war that has taken some oil off the market and disrupted the Middle East, and blame the U.K. government for that too (along with George Bush). They demand that the U.K. step up its efforts to go green and get off oil. The U.K. is trying to make oil and energy prices one of the key issues at the G8 summit in Japan in July. OPEC planners must be reeling--why spend more money to add production capacity if every country in the world is now figuring out how to reduce its oil use, and eventually, get off oil entirely? As the cost of adding incremental barrels soars, and weakened dollars flow into the sovereign wealth funds in the Middle East, it will make less sense to use those petrodollars to drill more. When do the lines cross? --Leslie Haines, editor in chief, Oil and Gas Investor, lhaines@hartenergy.com