The Future of the Oil Industry: Part 3
THE FUTURE OF THE OIL INDUSTRY
PART 3: The Scenarios
As we’ve discussed before (please refer to Part 1 and Part 2 on these series before continuing), the immediate consequence of an oil shortage would be an increase in its price and, therefore, serious economic problems. Let’s review the possible scenarios of the future we may be facing.
Catastrophe
We’re talking of course of the worst case scenario. Here the consequences of reaching the Peak Oil would be tremendous. The shortage of the production of oil and the growing needs of it would clash into an economic and social nightmare. Petroleum price would skyrocket pulling along all the other prices. Our food production industries wouldn’t be able to cope the shortage of its main energy source (remember, we spend 10 calories of petroleum-based energy for every calorie of food eaten!), and therefore the decreasing supply of oil would cause modern industrial agriculture to collapse, leading to a drastic decline in food production, food shortages and possibly even mass starvation.
The suburbs living-concept would prove unsustainable, because of its high dependency on the automobile (and therefore petroleum) for everyday transportation. Suburbians would be unable to afford fuel for their cars, and would be forced to move to higher density, more walkable areas.
Of course the environment would be affected as well. Because of the lack of its most efficient energy source, people may turn into those less environmentally friendly energy sources that still have significant reserves on our planet (such as coal). This would increase global warming (who needs the Kyoto Protocol if there’s a major worldwide economic crisis?), as well as health and developmental problems.
Recession
The second scenario assumes: a) A slow petroleum depletion rate; b) Stable world energy needs (better yet, diminishing ones) and c) A smooth (but quick) transition to alternative energy sources.
There has always been a close correlation between oil price spikes and economic decline and so, recession due to higher energy process is likely to occur. Crisis of the early 1970s was associated with the OPEC embargo, which triggered higher petroleum prices in the USA. After the Peak Oil, however, since it would be impossible to increase petroleum supply, no fix would be found and petroleum prices would escalate.
Higher oil prices, however, would turn alternative energy sources (such as hydrogen, solar cells, tidal energy, biofuels, etc.) economically attractive, and studies and investigations on them would flourish. Unfortunately, it would take many years to develop these technologies for mass consumption, and they would be more expensive (per unit of energy) than today’s petroleum.
Smooth Transition
This is the most positivist scenario. Here, petroleum would deplete very slowly, leaving time for new technologies to develop. In this scenario people is aware of the problem from the very beginning, and Universities and Research Institutes are focusing on these new technologies, with a conscious backing of the industry and government.
Developed nations would be also analyzing how to help petroleum producing nations (such as Saudi Arabia, Iran, Libya, Venezuela and others) to live in a non-petroleum era. New industries would be established on those countries so that they can generate wealth from non-conventional sources.
Nevertheless the cheap energy era would be over, and we all would have to either consume less (changing our lifestyles), or pay more for it.
In Part 4 we’re going to review the arguments of people who oppose to the Hubbert Peak Theory so, please, don’t commit suicide until we finish this discussion. The end may be not that near…
See you again!
___________________________________________
The data mentioned here was obtained from the following sources, and you’re invited to visit their pages:
- Wikipedia (Implications of Peak Oil)
- Life After the Oil Crash
- Association for the Study of Peak Oil and Gas
- Wolf at the Door
- World Energy Council
- Newsweek
- Slate
PART 3: The Scenarios
As we’ve discussed before (please refer to Part 1 and Part 2 on these series before continuing), the immediate consequence of an oil shortage would be an increase in its price and, therefore, serious economic problems. Let’s review the possible scenarios of the future we may be facing.
Catastrophe
We’re talking of course of the worst case scenario. Here the consequences of reaching the Peak Oil would be tremendous. The shortage of the production of oil and the growing needs of it would clash into an economic and social nightmare. Petroleum price would skyrocket pulling along all the other prices. Our food production industries wouldn’t be able to cope the shortage of its main energy source (remember, we spend 10 calories of petroleum-based energy for every calorie of food eaten!), and therefore the decreasing supply of oil would cause modern industrial agriculture to collapse, leading to a drastic decline in food production, food shortages and possibly even mass starvation.
The suburbs living-concept would prove unsustainable, because of its high dependency on the automobile (and therefore petroleum) for everyday transportation. Suburbians would be unable to afford fuel for their cars, and would be forced to move to higher density, more walkable areas.
Of course the environment would be affected as well. Because of the lack of its most efficient energy source, people may turn into those less environmentally friendly energy sources that still have significant reserves on our planet (such as coal). This would increase global warming (who needs the Kyoto Protocol if there’s a major worldwide economic crisis?), as well as health and developmental problems.
Recession
The second scenario assumes: a) A slow petroleum depletion rate; b) Stable world energy needs (better yet, diminishing ones) and c) A smooth (but quick) transition to alternative energy sources.
There has always been a close correlation between oil price spikes and economic decline and so, recession due to higher energy process is likely to occur. Crisis of the early 1970s was associated with the OPEC embargo, which triggered higher petroleum prices in the USA. After the Peak Oil, however, since it would be impossible to increase petroleum supply, no fix would be found and petroleum prices would escalate.
Higher oil prices, however, would turn alternative energy sources (such as hydrogen, solar cells, tidal energy, biofuels, etc.) economically attractive, and studies and investigations on them would flourish. Unfortunately, it would take many years to develop these technologies for mass consumption, and they would be more expensive (per unit of energy) than today’s petroleum.
Smooth Transition
This is the most positivist scenario. Here, petroleum would deplete very slowly, leaving time for new technologies to develop. In this scenario people is aware of the problem from the very beginning, and Universities and Research Institutes are focusing on these new technologies, with a conscious backing of the industry and government.
Developed nations would be also analyzing how to help petroleum producing nations (such as Saudi Arabia, Iran, Libya, Venezuela and others) to live in a non-petroleum era. New industries would be established on those countries so that they can generate wealth from non-conventional sources.
Nevertheless the cheap energy era would be over, and we all would have to either consume less (changing our lifestyles), or pay more for it.
In Part 4 we’re going to review the arguments of people who oppose to the Hubbert Peak Theory so, please, don’t commit suicide until we finish this discussion. The end may be not that near…
See you again!
___________________________________________
The data mentioned here was obtained from the following sources, and you’re invited to visit their pages:
- Wikipedia (Implications of Peak Oil)
- Life After the Oil Crash
- Association for the Study of Peak Oil and Gas
- Wolf at the Door
- World Energy Council
- Newsweek
- Slate
1 Comments:
Strange isn't it, that after being so high tech (petrol-based technologies), we might have to revert back to the so called "cave man" lifestyles if the alternative energies fails. The world is seriously not ready to face a serious petroleum crisis, even the recent price hike in the US (relatively minor compared to the probs we have to face in the future) caused so much grief among the citizens.
But never underestimate our resourcefulness. In the end, who really knows what the future holds?
Ai Ling
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Anonymous, at 12:32 AM
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