Cumulative oil production between now and 2010 is likely to exhaust all presently proved reserves of “conventional” oil (Table 10–6). Because of intervening discoveries, however, oil reserves should still be at least as large as they are now, but they will be high-cost reserves, with production costs at least twice those of conventional reserves in the United States.*
The Middle East and Africa will become large exporters of natural gas and uranium; U.S. and Canadian uranium will also face a considerable export demand. The degree to which these countries will be willing to satisfy this demand with political conditions acceptable to importers is difficult to foresee.
The communist countries are a source of considerable uncertainty. Oil production in the Soviet Union appears to be leveling off, while consumption there and in Eastern Europe continues to grow. The Soviet Union is now a sizeable exporter of oil to the noncommunist world, especially to Western Europe, but may find it difficult to maintain these exports, thus making Western Europe even more dependent on OPEC. Indeed, some analyses suggest that the Soviet Union may have to import oil in the mid-1980s. If so, there would be a considerable impact on the demand for OPEC oil. However, the resulting strain on the Soviet balance of payments may force the regime to adopt stringent conservation measures and to rely more on natural gas, with which the U.S.S.R. is well endowed.
There is even more uncertainty about China’s oil resources. In view of China’s industrialization plans, which imply rapid growth in energy consumption, it appears unlikely that China will become a major exporter. On the other hand, China can probably not afford large oil imports if domestic discoveries are disappointing. Thus there is little reason to view China as a major factor in the world oil market during the remainder of this century.
6. As oil production gradually falls more firmly under OPEC control, the opportunity for surges in oil prices like those of 1974 and 1979 will increase. Moreover, as OPEC’s reserves of low-cost oil are depleted, the incentives to raise prices will increase; this would be true even in the absence of a cartel. The price of uranium, increasing at an accelerating rate as the electric power industry becomes predominantly nuclear, could approach $100/lb of U3O8 (in 1972 dollars) by the end of this century if reprocessing is prohibited. Even with reprocessing and recycling of fuel, the uranium price will probably be high enough to make breeder reactors competitive with existing types in some parts of the world, especially in