From Jim Hamilton
The challenges for private oil companies to increase oil production are pretty daunting.
ExxonMobil (XOM) has been producing a little over 2.4 million barrels of oil a day for the last year and a half, its lowest rate of production over the last decade.
Its becoming increasingly clear that oil production is stabilizing. I would have expected a more traditional Hubert Peak but technological changes seem to suggest that
A) Oil production is slowing down slightly sooner than I would have thought.
B) Production is unlikely to decline rapidly but will in no way keep up with growing demand.
Moving forward, these facts must be central to our national policy. As I believe is clear to everyone by now, rapidly increasing prices of oil shift the balance of international power in ways that are not favorable to the United States.
Even if there is massive advancement in alternative fuel technology, what that likely does is slow the growth of oil prices. If alternative fuel is viable because oil is expensive then alternative fuels cannot make oil inexpensive.
We have a vital national interest is subsidizing the move away from oil. Not to incubate new technologies or simply insulate ourselves from shock, but to drive down the international price. To make oil a less valuable natural resource.