The Oil Shortage That Need Not Be : Not now or any time soon, if we conserve and develop alternative energy sources

There’s no global shortage of oil--yet. There doesn’t have to be one.

The U.N.-sanctioned international embargo to punish Iraq’s aggression has halted oil exports from Iraq and Kuwait. But this has created only a manageable problem of sourcing , not of supply . The major industrialized countries have hundreds of millions of barrels of oil in storage, precisely as a cushion against any net supply losses. The U.S. Strategic Petroleum Reserve alone holds 590 million barrels, which can be dipped into to compensate for the 4.6 million barrels a day no longer coming from Iraq and Kuwait. It’s possible that none or only a little of the reserve will be needed.

For the clear signs now are that OPEC members concerned about maintaining stable international markets are ready to boost output to make up for embargoed Iraqi and Kuwaiti oil. Saudi Arabia alone can quickly raise production by up to 2.2 million barrels a day. Venezuela says that it’s ready to pump another 500,000 barrels a day. Smaller levels of reserve capacity exist in several other OPEC countries. Even Iran now says that it wants a balanced market, and will go along with an OPEC decision to raise output.

This is a remarkable show of responsibility on the part of countries that just a few weeks ago reaffirmed strict OPEC production quotas in an effort to hike prices. Now, angered and frightened by Iraq’s brutal conquest and annexation of fellow OPEC member Kuwait, they are about to take steps that should help nudge prices down from the panic-driven level of $28-plus a barrel. There is prudent self-interest in all this; recent history has shown that in the end, runaway recession-inducing prices harm the economies of oil producers as well. Meanwhile, consuming nations, to say nothing of consumers who have been gouged at the gasoline pumps and threatened with higher inflation and interest rates, can only welcome this action.

One big caveat: If Saddam Hussein engages in some act of lunacy that cuts Saudi production, the supply situation would change significantly and threaten worldwide economic disruption. All the more reason for big oil users, especially the biggest of them all, the United States, to get serious about renewed energy conservation and finding alternative sources to oil.

Right now it looks as if good sense will offset the initial panic and opportunism that sent oil prices soaring. But the future in the Persian Gulf remains clouded with uncertainty. The need to prepare for the next oil shock hasn’t lessened.