Theories Abound

All right, who - or what - really is to blame? For those high and relentlessly increasing energy prices. Costing us infinitely more to fill up the family van (or SUV, or family car) and to heat our homes. Not to mention flying to our various destinations - and in the process creating additional environmental damage. And then there's the higher cost of production of all manner of goods and foodstuffs, thanks to higher energy costs. Let alone transporting those same foods and goods far and wide.

And although we're feeling the pain now at the gas pumps, we're being forewarned, it's going to get a whole lot worse. We're informed that supplies are in high demand. We're told that there's plenty being stockpiled. That this is a speculative bubble, people making big money on energy futures, and we're stuck with the results. All right; India and China, we're informed, with their huge populations newly enjoying a more middle-class lifestyle are sucking up a lot of that energy.

Fossil fuels are running out, becoming scarcer, unable to meet current demands. The "sweet", clean oil is being depleted, and processors are turning to really dirty stuff, like what's coming out of the Alberta tarsands. And here's the head of BP PLC, the world's second-largest oil company, telling us that sky-high crude prices are "based on fundamentals". But wait: we only think they're high at the moment; they're destined in the near future, to break that ceiling and double in price for a barrel of crude.

Which is to say, there's a tight balance between supply and demand; the U.S. dollar is weak; and it's not the fault of "speculators"; they've been unfairly maligned, they are "investors", vital to the future of oil production and distribution. Demand, claims Tony Hayward, at the 19th World Petroleum Congress in Madrid, has simply outstripped supply. So, wait for it, prices will continue to skyrocket, and we'd better get used to it. And use less of it.

And Shell's CEO Jeroen Van der Veer emphasized that the world is facing the inevitable problem of less fossil fuels available. We're left with what he characterizes as the "unconventional sources", like Canada's oilsands. Where his company is investing billions to increase output. While U.S. legislators are crying "foul!" and insisting they're bitterly opposed to that dirty stuff. More costly to produce, especially when trying to clean up the process, so more expensive at the gas pump.

Canada, however, represents less than 3% of the world's current production, while having the second-largest reserves outside the Middle East. It's one of the few non-OPEC countries increasing output, and one of the few in the world that welcomes foreign investment. It would seem that 90% of the world's oil reserves are located where access to international oil corporations is severely limited.

How odd; countries whose resources are sought-after, wishing to retain as much of the benefits for themselves as they can manage. Meanwhile, Middle-East watchers have been treated to the news that Iraq has opened its huge oilfields finally to foreign companies, inviting bids for the development of its production fields. Something the country is incapable of doing on its own, requiring cash and expertise it doesn't have.

Saudi Arabia, Kuwait and the United Arab Emirates operate their own national firms, wisely insisting on maintaining tight controls on foreign investment. Like Venezuela, like Iran (which hasn't the capacity itself to refine its product), like Russia, like Sudan. Iraq's proven reserves come in as the largest after Saudi Arabia and Iran. Then there's the matter of reliability of sourcing, in volatile regions of the world.

Events happen, out of the control of governments sitting on oil riches. The Middle East countries live in fear of attacks on their oil installations, their pipe lines. The first invasion of Iraq saw huge explosive events as the pipe-lines were blown up. The U.S. invasion tried to forestall a fresh scorched-earth policy. Producing countries are vulnerable to attacks by predators, by impoverished people trying to filter off some of the resources, by local militias representing disaffected portions of the population.

When Hurricane Katrina hit the U.S., some of its vital oil refineries were affected, and the Americans turned to their allies in oil production and distribution to help make up the difference until they could get back into production. In Nigeria recently, armed rebels from the Movement for the Emancipation of the Niger Delta attacked a huge oil facility off the West African coast.

Nigerian officials claimed at a global energy summit in Saudi Arabia, that such attacks had cut their oil production to their lowest level in 20 years. This had quite the impact on the oil markets, helping to send prices ever higher. The rebels are somewhat aggrieved that those they represent aren't enjoying a trickle-down effect of the oil wealth in the country.

But stealing oil and smuggling it elsewhere has proven to be profitable as well. Along with the kidnapping of foreign oil workers for sizeable ransoms. Resulting in oil companies finding it the better part of valour, and reasonable to decamp from the area. Nigeria is the world's eighth-largest oil exporter, supplying roughly a tenth of U.S. oil imports.

Sourcing energy for the future is a problem world-wide, no mistake about that. New theories and innovative working plans for harnessing solar power, once they're perfected and into mass production may help enormously. In the interim, there's nuclear power. And Jordan, one of the few unfortunate Middle East countries without oil resources, has signed deals with the U.S. and France, and perhaps Canada for nuclear installations.

Morocco and Turkey are looking at nuclear power for their future energy needs. As are, famously and infamously, countries like Iran - encouraging other Middle East countries, currently surfeit with ongoing oil production and consequent wealth, to make their own bids for nuclear energy sources; for entirely but understandably different reasons.