Publications: The Petroleum Economics Monthly

The Don Quixotes of Oil (February 2017)


The oil industry's old order clings to the past. Thus, IEA representatives and some executives demand that investors pour hundreds of billions into high-cost projects to boost the capacity to produce oil from large oil fields in ten or fifteen years. These individuals threaten the public by raising the specter of the very high prices that will result if the investment money is not forthcoming. The subtitle of this report, "The Demise of Petroleum's Old Order," calls attention to the fact that the thinking that has dominated the oil sector for fifty years needs to be retired. New market institutions, new players such as trading companies, well-educated consumers, and most importantly, the breakdown of monopoly institutions make those bent on perpetuating the old ways—the IEA’s executive director, for example—irrelevant in today’s world. In short, the IEA and others in the old order have assumed the role of Don Quixote, a gentleman trying to live in a world that had been dead and gone for many years.