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Cheap Oil Is Gone Forever

The oil is not running out that low, yet. But, it seems that the exploitation of remaining resources will become more and more costly.

Posted: Feb 2012

Despite the fact that new oil fields have been found in Brazil and North Dakota, it seems that the new sources of oil can barely cover the shortage of the oil caused by demand increase and depletion of existing oil fields.

According to report published on Nature.com, the world production had hit the ceiling of 75 millions of barrels daily. And it is stagnating since then. So far the mankind consumed over a trillion barrels of oil. The estimates say that there is a trillion barrels of oil remaining, but its extraction will be costly.

According the David King, from Smith School of Enterprise and the Environment at Oxford University, the resources of cheap oil are exhausted. His colleague, James Murray University of Washington, consider that it is not likely that some significant new oil field can be found.

Both experts claim that their conclusions are based on analysis of U.S. Energy Information Administration agency data. The production is stagnating since 2005, despite the fact that oil price is increasing. Their conclusion is that there are no additional capacities that can satisfy the growing demand.

According the King and Murray, the oil is not running out yet. Simply, we are running out of the oil that can be easily and cheaply exploited.

Authors of the study claim that official industry estimations are over exaggerated. U.S. Energy Information administration claims that the production can be increased by 30% until 2030, based on assumption that new resources will be discovered.

King and Murray consider that the oil production passed from elastic phase in 2005 to non elastic phase. This means that the production of the oil can not proportionally meet the demand of the consumption. Consequently, the oil prices are going up.

The reserves of coal and gas are still considerable, but there is a risk that they are overestimated. This means that soon we could face the similar shortage of these resources.

The King and Murray think that the solution lies in energy efficiency improvement, improvement of nuclear energy and development of new technologies for exploitation of renewable energy sources. Since the transition may take the decades, the process should start as early as possible.