Oil, Development and Security: A Market-Based Approach

The present paper will attempt to explore the argumentation frequently employed in the public discourse – but less in economic theory – by different categories of stakeholders that the exhaustion of world oil reserves will have a dramatic impact on global economic growth and development. Because of such an alleged impact, policy makers in different countries argue that a stable and cost-effective supply of oil is a matter of national security. Significant political events at a world scale are the result of such an approach. Starting by demystifying the concept of “economic security”, the present paper demonstrates that the best approach to such an alleged problem is to let the markets do their job. Any other solution won’t solve the problem but impose significant costs on society for the maintenance of a status quo which is not sustainable. The history of the myth of the “peak oil” is more a matter of political debate rather than of an economic one. It serves certain categories of stakeholders but not the consumers, the alleged targeted beneficiaries.