by Alex Kee

Created on: November 22, 2007

Water is priceless to a person perishing in the desert, he or she will give you the world for that glass of water if that is all that separates life from death.

Other than the above scenario, the relative value of water and oil is a pure matter of economics demand, supply and price dynamic equilibrium.

Will water ever become more valuable than oil?

Well, it always has been in the oil rich countries of the middle east where a liter of bottled water always costs more than a liter of gasoline, all because oil is more abundant than drinking water in these desert nations.

The current escalation of global oil prices is not new, but the reasons for its recent sharp rises can be attributed to many reasons and opportunistic price speculation as well as the weak US Dollar are inter-alia amongst the reasons.

The pertinent question is will water ever become more economically (as opposed to real) valuable than oil globally?

My take is, "No" for very simple reasons of demand and supply.

The total amount of water available today in the world has not change since the Jurassic time. The supply of fresh water we receive everyday comes from the power of the Sun through the renewing Hydrological Cycle. It can be said that there is actually no new water today, only fresh recycled water.

Chances are that the water you drank today was once somebody's urine, but because it has been distilled by the Sun's energy to form clouds and return as precipitation, harvested and treated by the local public water authorities, it become fresh drinking water again.

Oil also undergo the same but not identical renewable process, the only difference lies in the cycle: millions of years instead of days, weeks, months and years as in the case of water.

The Earth ought not run out of water since it is a renewable resource provided by Nature, but shortages in diverse places can happen when there is an imbalance of demand over supply.

The is still an abundant supply of water well distributed all over the world, unlike oil which availability only occurs in selected parts of the Earth.

The supply of oil will definitely run out because its renewable cycle is in a matter of a million of years rather than weeks like water is

Therefore, unless mankind is successful in being weaned off oil as a source of usable energy, the demand for it is not likely to fall, and with dwindling supply, its price must but rise.

The abundant and ubiquitous supply of water makes it a commodity with low economic value, but it is in no means unimportant or not valuable.

Like air, we take it for granted and treat it like nothing but free until one day, deprived of clean air with adequate oxygen, we being to appreciate the value of air. But alas, air is abundant and ubiquitous and therefore has no or low economic value.

Water will never become more economically valuable than oil, not even if man found a way to convert water into usable energy because like air, water is in abundance and well distributed all over the world, generally so that nobody or nation can exercise a control or monopoly over such a critical commodity.

No, water will never become more economically valuable than oil, generally.

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