Fill 'er up!

If you blinked, you probably missed it. Drivers, and the whole industrial world, were treated recently to a very-mini reprise of the oil gyrations of the 1970s.

Not only mini but in reverse.

First global crude prices fell to their lowest levels in almost exactly a quarter century. Then they bumped up again as OPEC stalwart Saudi Arabia teamed with non-OPEC Venezuela and Mexico to cut back production.

It's worth going over the background of this gyration, if only to reassure people planning summer vacations on wheels.

You already know the basics if you watch gas pumps. What's important to note is that for quite a way into the future oil supplies are likely to be plentiful. The ratio of proven reserves (known oil in the ground) to production (the amount being pumped out) has risen about 33 percent in the past two decades. And demand to pump out those reserves is not rising as fast as many had forecast - despite widespread prosperity and all those gas-guzzlers hemming you in on the road.

A number of factors have affected the supply-demand balance since the 1970s. Holding down output were the Iran-Iraq War, Gulf War, and Iraq embargo, plus the general decay of facilities in the former Soviet Union. Adding to output were new discoveries worldwide, and particularly more output in the Mideast. Output there rose slightly more than 50 percent in the past decade. Holding down consumption were efficiencies in the industrialized world (a reaction when prices rose). And, recently, the temporary decrease in Asian demand.

Net result: a plunge from $25 a barrel for benchmark crude in late 1996 to $12 in mid-March 1998. That brought the two gulfs (Persian and Mexico) together to nudge prices up. But the (literally) underlying fact remains: Oil reserves are too large to permit a big price rise now.