No doubt that one day, we will run out of oil. That is for sure.
So when that comes, what will happen?
How far away is it?
What alternatives do we have?
Safe investments?
Discuss
When we run out of oil, what will happen?
Gdsamp on 11/02/2014 - 21:11
Comments
Not an economist here. Just from what I know from Econ 101.
All I know is that we won't actually run out of oil — just that the costs of procuring oil will be so astronomically high that we will eventually be weaned off it and start using the alternatives. Just like how a baby gradually stops sucking it's mother's teat, we will need to find alternatives to extremely pricey oil before the 'peak' decline happens.
Biofuel is the most sought after alternative here, but carbon neutral biofuel production currently exists only as a test-tube theory.
Oil production (supply) goes down over time, so prices go up.
Alternatives become price-competitive, and attract investment and innovation.
Supply of alternatives goes up, so prices come down.
Problem solved.
How come when oil went up from $25 a barrel there were no alternatives to stop it reaching $100 a barrel?
Is it maybe true that the price competition might not produce an alternative as cheaply as we wish?I didn't say at what price the alternatives will kick in :)
My understanding is that wind/solar/etc require $150-$200/barrel oil before they are competitive.
Bad things.
There is a fairly strong argument that a large part of economic growth is due to ready availability of fossil fuels, especially oil as it is the most convenient to use.
If we are left to rely on growth through worker productivity, it is likely to be limited to less than 1.5%.
Our country aims for 2.5-3.5% growth to keep unemployment low, so less growth is likely to mean more unemployment.
Also, because energy costs are an integral component of almost every item, higher energy costs translate directly into a lower standard of living (or at least a more slowly improving one).
The question is how quickly these things will happen.
The modelling that has been done for groups like the US military suggests that oil supplies might decline fairly swiftly, making it hard for many people to adapt to higher costs.
This will obviously impact people in the developing world much more harshly than Australians, as while we use much more oil, we can also afford to pay more for it.
There are counter arguments that technology will find alternative sources of energy, and this has happened a little in the USA with "fracking" of shale to get oil and gas.
Unfortunately, the alternatives all look quite costly. Certainly, if it was possible to produce large amounts of oil for less than, say $80 a barrel, you would expect the last 5 years of consistently near-$100 a barrel would have made it happen.At some point, we will have to get over our fear of the nuclear booger man.
"So when that comes, what will happen?"
Ever seen Mad Max?
The alternatives currently suppressed by oil companies will "surface".
Just like the Tin Man in Wizard Of Oz, it will stop working…
in terms of energy alternatives: solar is not as sustainable long term, because of the embodied energy costs; as is wave\hydro power; natural gas reserves are disappearing almost as quickly as crude; wind and geothermal power are potentially more sustainable, but only suited to certain locations; the big breakthrough will be sometime this century when fusion power becomes a reality, (it may happen within 30-40 years if the price of others, such as oil, increase enough to make serious global research investment attractive).
the biggest issue is replacement of the petroleum used in so many products we use everyday (eg. packaging, car components, building materials, toys, computers, tyres, lubricating oils, fertilizers, pesticides, herbicides, detergents, furniture, paints, fibers used in clothing and upholstery, carpets).
Some truth in this, but lots of inaccuracies.
Solar is plenty sustainable long term, with much higher EROEI than many 'alternative' fuels:
http://en.wikipedia.org/wiki/Energy_returned_on_energy_inves…The petroleum diverted to industrial use is a small fraction of that used for transport/energy and easily replaced by outputs from gas, coal or synthesised from ethanol. This is almost a non-issue.
The biggest problem by far is what to replace the massive energy oil gives via nearly 100million barrels per day.
In terms of scale, coal and gas could get there. Nuclear could for a time (u238 is nonrenewable) and solar perhaps. None of these are as useful for transport and other uses as oil, and all will take extra energy to be adapted for industrial use.Any way you look at it, the world is in for some substantial adjustments over the next years as we adapt to lower oil availability.
With the LNG and US oil shale discoveries you need to find something else to worry about.
Well, no.
The US shale will perhaps cut down their imports by a few million barrels a day, but they will continue to use millions more barrels everyday than they can produce.
See page 15 and 18 here for optimistic graphs from the US gov still showing multi-million barrel daily deficit:
http://www.eia.gov/pressroom/presentations/sieminski_0104201…LNG is good for Australia, as we have more gas than we can use, so we are exporting it. But we still import around half a million barrels of oil every day.
LNG and shale have captured the headlines, but they do little to change the underlying story.
There is plenty of oil left, but it is getting more and more difficult and costly to extract, which is why it sells for so much more than it did 15 years ago.
The world isn't running out of oil, its running out of easy to produce oil.
And when it costs 1 barrel of energy to drill and pump the next barrel of oil, it will stop making sense to keep drilling for it. Even though at that point there will still be many millions of barrels left in little pockets around the world - they just won't be able to be extracted profitably.
it will come to a point that the only group who can afford oil products will be the govt. to run their jet fighters and tanks and stuff, national security at all costs
how does this leave truck drivers and airlines and shipping?
that will have an impact on freight and the cost of food on the table
personal cars as i see it, arent a big deal $40k electric cars will be $20k Chinese electric cars soon
The problem is that we won't. They are exploring even more polluting hydrocarbon sources such as tar sands and frozen methane.