This is what you won’t be reading from the official press release following next week’s OPEC meeting in Angola.

Member states are guzzling tons of their own oil and have less and less stuff to export to you. Fortunately, since oil prices are almost four times higher than they were a decade ago, those states can afford to export less because they get that much more for every barrel they do.

It’s a nice model if you’re Hugo Chavez. Not so nice if you’re a North American motorist.

OPEC, together with two non-cartel oil producers, Russia and Mexico, consumes 14.5 million barrels of oil per day. That’s nearly twice as much as China, in case anybody is keeping track. Oil demand among OPEC members has been growing at well over double the world average. And the more these countries consume their own oil, the less they have to export to you.

So what makes oil-producing countries so thirsty for their own fuel?

Well, if you’ve ever been to a gas station in Caracas you’ll have some sense of it. A taxi driver there is filling up for 25 cents a gallon with the same oil you thought Petróleos de Venezuela was going to be exporting to you for $70 per barrel.

And if you think Venezuelan motorists have a good deal, check out Ski Dubai. One day carving turns on the artificial snow there burns up the energy equivalent of what the average North American driver uses in gasoline in a month.

But the Middle East burns a lot more oil making water than making snow. Places like Saudi Arabia or Dubai consume anywhere from seven to fifteen times the water that is naturally replaced every year. And the biggest subsidy of all is for the power that drives all the desalination plants they need.

The Saudis burn oil at the equivalent of 7 cents a gallon to create the power to drive their desalination plants (50 per cent of all electric power in Saudi Arabia is oil-fired). And just like gasoline prices in Caracas, those rates don’t change, whether world oil prices are $20 per barrel or $147 per barrel.

Massively underpricing—hence massively over-consuming—your own resource isn’t unique to the oil industry, or to OPEC. Just ask Hydro-Québec when it plans to stop subsidizing power rates in La Belle Province—probably around the same time Saudi Arabia and Venezuela start charging their citizens world oil prices for the gasoline and oil-fired power they consume.

How OPEC countries burn their own oil is their business. But before driving away in a brand-new gas-guzzling SUV, consider where you will be getting your fuel in the future.

Chances are it won’t be coming from OPEC. And chances are it won’t be cheap.

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  • http://www.arnweb.com/kendeluca/ Ken DeLuca

    I’m part way through reading Jeff Rubin’s book and I feel his title should have been extended to read “ Your world is about to a whole lot smaller… and poorer”. In 1966 I was in college protesting against the war in Viet Nam, for Civil Rights and generally advocating for greater equity for people in developing nations. My professor of political economics asked me what I thought my world would be like if the 'Third World' were to get flush toilets. That was a metaphor, of course, for the all the luxuries we enjoy and take for granted in the West, including abundant fresh water, natural resources and energy. Even back then a few economists understood that there’s only so much to go around.

    That professor was poking fun at the disparity between by youthful ideals and my inherent interests. I find it ironic that the fair-minded left most recently protesting for environmental sanity and against globalization may well get what they're asking for and yet wake up to a world beyond what their ( our ) pampered and priviledged lives have ill prepared them ( us ) for the inevitable. Thus all empires, I suppose.

    I am determined to finish the Rubin book. But it's like taking a dose of foul tasting medicine. And that's just the book! The reality thereof will be much harder for my children to swallow, I'm sure.

  • marcovth

    Why so negative? I have to young kids too.

    - Jobs will be coming back. Meaning, the money we spend will stay in the local economy, and will not go to China.

    - Your kids will be less stuck in traffic. And if they get stuck, it will be in electric cars, powered by …

    - There will be alternative, clean, and very abundant sources of energy coming. If companies like potterdrilling.com are successful, geothermal energy will cover the energy needs for thousands of years to come.

    If we could have put a man on the moon 40 years ago, for sure we can figure out how to tap all the geothermal energy we need within 40 years from now ! It takes a couple of 10km+ holes in the ground, and a water pumping system to generate steam from heated earth layers deep in the ground. There is plenty of energy there, much more than what we would ever need to generate electricity.

    Yes, it will take 10 or 20 year shock therapy to change things around, but the alternative is not much better: potential dramatic climate change + forking over all of our money to China and the Middle East.

    Don't worry, your kids will be smart enough to figure out how live a good life.

  • johnsavage

    You may be interested in this item form the Times which explains that “Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas”.

    http://business.timesonline.co.uk/tol/business/…

    Best wishes

  • johnsavage

    You may be interested in this item form the Times which explains that “Manufacturers increasingly are moving production back to Britain as shoddy quality and higher freight prices are undermining the cost advantage of producing goods overseas”.

    http://business.timesonline.co.uk/tol/business/…

    Best wishes

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