What will we do if we have no oil?

DURING the past month, the media expressed wild concerns about the US Fed interest rate changes, the true capitalisation of Deutsche Bank in Germany, the slowdown of the Chinese economy, and the International Monetary Fund's forecast of lower than usual global growth.

In the background, oil prices continued to fall but the market reacted predictably: there is excess supply so the oil price has been marked down in an orderly manner. A meeting of oil producers in Houston, Texas, at end-February could well produce a solution - needed partly because excess supply will soon fill every storage container, and also the budgets of producer nations are in a mess. They were drawn up when oil was over US$110 per barrel rather than today's US$33; even rich Saudi Arabia lost US$115 billion last year and is considering selling shares in its state oil company, Saudi Aramco.

Fossil fuels were created about 450 million years ago when the world was a very different place. Masses of fallen trees accumulated in chasms and valleys, and fish and other marine life forms died and accumulated on the sea floor and both areas became covered by sediment.