Krugman on oil supplies:
"the end [the energy crisis of the 1970's] has been widely misunderstood: prices went down not because the world found new sources of oil, but because it found ways to make do with less. During the 1980's, oil consumption dropped around the world as the delayed effects of the energy crisis led to the use of more fuel-efficient cars, better insulation in homes and so on. Although economic growth led to a gradual recovery, as late as 1993 world oil consumption was only slightly higher than it had been in 1979. In the United States, oil consumption didn't regain its 1979 level until 1997.
Since then, however, world demand has grown rapidly: the daily world consumption of oil is 12 million barrels higher than it was a decade ago, roughly equal to the combined production of Saudi Arabia and Iran. It turns out that America's love affair with gas guzzlers, shortsighted as it is, is not the main culprit: the big increases in demand have come from booming developing countries. China, in particular, still consumes only 8 percent of the world's oil — but it accounted for 37 percent of the growth in world oil consumption over the last four years.
The collision between rapidly growing world demand and a limited world supply is the reason why the oil market is so vulnerable to jitters. .. In a way it's ironic. Lately we've been hearing a lot about competition from Chinese manufacturing and Indian call centers. But a different kind of competition — the scramble for oil and other resources — poses a much bigger threat to our prosperity.
So what should we be doing? Here's a hint: We can neither drill nor conquer our way out of the problem. Whatever we do, oil prices are going up. What we have to do is adapt." 8:50:35 AM