Despite a recent dip, oil prices have surged almost 50% in the last year. The Obama administration routinely blames energy traders, BP and Exxon. Meanwhile, pundits warn about “Peak Oil.” According to this theory, the earth is running out of dead dinosaurs, and oil prices have no place to go but up. “We cannot drill our way out of the mess,” goes the refrain. A few years ago, T. Boone Pickens turned in his oil drill-bit for a windmill and bought full-page ads proclaiming the end of fossildom.
Since higher oil prices often coincide with climbing corn, cotton and cocoa prices, “Peak oil” pundits now extend their argument to all commodities. They may not, as Thomas Friedman does, believe the world is flat – but they do seem to think the earth is hollow.
In fact, the stumbling block to tamer pricing is not geologic – it is not even environmental — it is a lack of talent. We are not suffering from peak oil – we’re suffering from “peak people.”
The U.S. graduates only 10 percent as many petroleum engineers as it did twenty-five years ago. West Virginia has a shortage of coal miners because the coal miner’s daughter doesn’t want to don a headlamp. And today’s miners must learn how to use sophisticated equipment.
Foundries in Houston struggle to find machinists who can handle pipes and valves without tripping into the gears like Charlie Chaplin in Modern Times. Maybe if we had one more petroleum engineer, she could have figured out how to cap the exploding BP oil rig in the Gulf of Mexico!
We see the same pattern across the commodity markets. When steel prices rise, we don’t have metallurgical engineers. When grain prices jump, tortilla and rice riots take place from Mexico to Haiti to Thailand to Bangladesh, and yet we have no more agricultural scientists than we did ten years ago.
Higher prices will bring more people into these disciplines, but Universities and Community Colleges could help by launching commodity majors. Not in “make-a-quick-buck” financial speculation, but in figuring out how to get more stuff out of the ground.
Today in the U.S., we have more dance choreographers than metal-casters. That makes it easy to put on a high-kicking production of Oklahoma, but a lot tougher to erect an oil rig in Tulsa.