Charles Hunter
02/06/2012 AME/EG40401 The Future of Oil
The current year is 2012, oil prices have risen and most of society in the United States has conformed to believe that oil prices will continue to rise and the realization that filling your gas tank to full with $20 worth of gas is a thing of the past. The future of oil is a world of uncertainty. There is no scarcity of opinions regarding what may happen in future oil supplies. There are two general categories that overlay the outlook on oil for humankind. The first category includes members who have a conservative/pessimistic point of view. Those who belong to this category believe there is a Hubbert’s Peak. Geologist M. King Hubbert theorizes that the production of petroleum tends to follow a bell-shaped curve. This curve indicates that at some point in time there will be a peak in production when half of the world’s total supply of oil will have been consumed. The second category includes members who have a growth/optimistic point of view. Those who belong to this category believe that oil supplies will continue to increase and will meet the increasing demand of the future. The pessimistic and optimistic view on the future of oil leads to several potential supply and demand scenarios which may occur several years from the present. There are underlying assumptions that must occur in order for the scenarios to come to fruition and many scenarios are affected by economic, technological, environmental, political, and/or geopolitical factors. This essay will look at a few supply and demand scenarios using the year 2030 as a leaping point and remain unbiased towards the pessimistic and optimistic views that will be presented. Before diving into the scenarios, it is important to recognize the constants that will exist between any of the scenarios. The first constant factor is the growth of the world’s population. Several countries, particularly in Asia, have populations which are growing at alarming rates and
are not only putting a stress on the resources of their own country; they are quickly increasing the demand of energy and resources globally. Another constant which is generally associated very quickly with the previous constant is that the energy needs of the world will continue to increase from 2012 to 2030 and beyond. Even without a population boom, the energy needs will increase regardless as the quality of life increases around the world. The first scenario which may occur is that the supply and demand for oil will continue to increase but the demand will be met by the supply. This scenario is heavily dependent upon the advancement of technology in the future. By the year 2030 technological advancements will allow for the extraction of several oil reserve sources that are currently too costly to retrieve. The transportation industry will continue to be the most dependent on oil as opposed to using other alternative fuel and renewable energy sources. Advancements in technology will shift other industries to other renewable energy resources because they will be cheaper and more efficient to use and produce. The continuing supply of oil will allow the price of oil to rise year by year with inflation. The economy will be focused on funding alternative resources before the long supply of oil eventually declines in production. The consumption of oil will be used to maximize resource utilization and foster economic growth. The growth of alternative energy will relieve the pressure from the demand of the oil supply and extend the time before the total depletion oil in the world. However, the maximizing of resource utilization has significant environmental issues. The increased technology will allow oil to be drilled and recovered from previously untouched environments and negatively affect the wildlife in those areas. These environments may also be
geographically challenging to drill into and lead to new dangers for the environment other than an oil spill into the ocean. These factors will have to be watched over but the politics and necessity of the situation without oil will lead humankind to make a decision for their greater good and for the sustainability of a high quality of life. The second scenario which may occur is that the demand will far outreach the supply of oil. Hubbert’s Peak will occur and by 2030 changes have to be implemented or prepared for a future where oil will cost too much to drill and production will decrease. The United States economy will have to implement incentives or regulations in order to shift towards a lifestyle of conservation and a reduction in demand for oil. This will also allow more time for alternative resources to gain a stronger foothold as a significant energy source. Although advances in technology will allow for oil to be drilled more efficiently, the cost and risks involved will deter production. Unconventional oil will still be available but will be limited in supply due to cost. If this situation occurs before alternative resources can be supplied to meet the void in demand that oil will leave, the economy may crumble. The price per barrel of oil would jump significantly and be sold to the highest bidding country. The few remaining easily recoverable oil reserves may become focal points and possibly stretch relations between countries close enough to the point of war or nuclear destruction to gain those reserves and sustain their economy. Environmental issues will be a great concern. Future generations after the peak of oil will be of great concern in 2030. Technology must be used to advance energy efficiency in order to reduce the demand for oil. However, the sustainability of the environment in the future will
be dependent upon the advancements in technology to provide for cleaner sources of renewable energies and a cleaner burning of fossil fuels. There is no question that the world’s dependence on oil must be shifted in order to meet the demand of energy resources in the future. No matter if a country is developed or under developed their demand and population will grow and meeting these demands will become a necessity for achieving an acceptable standard of living. The most likely scenario is that oil production will be unable to sustain the world economy. The power of technology to increase the productivity of alternative energy sources will develop throughout the years and continue to increase. Regulations and incentives will be put in place to aid alternative resources in meeting the energy demand by reducing the global energy needs. Along with these, industries may face fees or other regulations to penalize them for refusing to shift towards reducing energy demands or transferring to renewable resources. The decline in oil will stretch the relationship between high supplier and high demand countries, but because there was already a plan set in place the relations will not reach a breaking point. The future of oil in this scenario will lead to a benefit for the environment. The world will become shifted towards a sustainable future and with the increased consumption of renewable resources and decreased consumption of oil and other fossil fuels there will be less greenhouse gases and toxic chemicals emitted into the atmosphere. Invoking my personal values to decide on a preferred scenario involves several factors. I realize the enormous difficulties and the amount of time that may pass in order for alternative fuels to become a reliable and supply heavy resource to meet the energy demands of the future. I am one who puts my faith in technology over politicians. I do not think politicians will ever be
able to create the type of regulations and incentives necessary to make an impact upon the world and reduce demand until too late. I believe technology will overcome many of the environmental, conservation, and efficiency issues involved with energy demands. However I think technology will not be able to overcome the enormous demand without a significant reduction in demand. However, in a preferred scenario a high quality of life will remain constant in the future and technology will advance to the point to supply the needs of the future. Overall my preferred scenario takes bits and pieces from the scenarios presented above. This is because I do not believe there will be a utopia created where an enormous supply of oil will be found to sustain the future or will a catastrophic future or Malthusian future of social unrest and destruction occur. These are just a few of several possible supply and demand scenarios which may occur in the future. Every scenario has important economic, technological, environmental, political, and geopolitical factors. No matter what the scenario there remain constants for all of them. Global population will grow, energy demands will increase, and it is guaranteed that oil will run out in the future.