There are some things most people today know about oil.

* Global oil output is going to plummet
* Prices are going to rise forever
* The transition to alternative energy will be long and painful
* There will be more ‘oil wars’ and industrial civilization may collapse
* Oil and gas will cause catastrophic climate change

The problem is that these ideas are wrong. Oil ‘ran out’ first in 1885, and perhaps another five times since then. Every time, new finds, new technologies and changes in oil use confounded the pessimists.

Oil prices above $140 per barrel seem to encourage the growing belief that we are approaching ‘peak oil’ and that supply cannot increase any more. But what has changed since 1998 when oil cost $10 a barrel? Just that a long period of under-investment in new energy supplies collided with rapid growth in Asia (and, easily forgotten, the USA). It takes years to turn the energy super-tanker around, to develop new oil fields, even though there is plenty in the ground.

There is a real debate over how much oil the world holds. But ideas of a vast conspiracy involving some mix of OPEC, the US government and ‘Big Oil’ to exaggerate oil reserves are fantasy. Official figures are, if anything, somewhat under-stated, and, as recent massive finds in deep water offshore Brazil show, new exploration frontiers still exist. Out-dated environmental moratoria in the USA could be lifted to yield more domestic hydrocarbons. New technologies continue to wring more out of old fields. Most importantly, ‘unconventional’ oil sources hold many times the volumes of conventional oil - from the famous Albertan ‘oil sands’, to fuels from natural gas, coal and plants, to ‘cooking’ oil out of shales that hold trillions of barrels in the USA alone.

So there is no need to fight ‘resource wars’ to ‘secure’ oil. Invading oil-rich countries is vastly expensive and makes oil supplies less, not more, secure. The Middle East is a growing part of the world economy, not a nest of terrorists, desperate to cut off oil supplies in order to bankrupt themselves and invite vengeance. Propping up dictators in return for energy ‘favours’ is not a valid long-term strategy either. The West, China, India and the oil exporters will gain far more from co-operating on energy, than following the mirage of ‘energy independence’.

Should ‘we’ invest massively to move to a renewable energy system? Well, we already are -- $100 billion in 2006 alone, and not only in the West, but in China, India, Brazil and other rising powers. It’s hard to grow renewable energy any faster. Renewables are clearly a key part of powering the future, and of fighting global warming, but oil (and gas, and coal) are going to be the main sources of energy for decades to come. Capturing the carbon dioxide from fossil fuels, and storing it underground, is entirely practical and should be a major part of climate change policy. Renewable energy and hydrocarbons are not enemies -- we need to use them both.

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