The future of oil

University Degree Business and Administrative studies

Academic writing

1st paper

Daniel Ohliger

The future of oil

This short outline represents the ‘future of oil’. Generally two different main ideas about the finiteness of the oil reserves exist. For example there are economists who are convinced that “substitutes are everywhere”. They have got an optimistic view about the future of oil. But on the other hand, there are geologists who think that the oil reserves will end soon and predict that oil will become a scarce resources. In the following outline we will discuss both position in detail. The first section describe the optimistic view of the future of oil, while the second paragraph deals with the pessimistic point of view

The disposability of oil in the near future is questionable. Leading economists and scientists claim that Britain should benefit from its North Sea production for many more years. In contrast to this, investigation has shown that the British oil and petroleum sector is mature. Oil has already peaked and gas will peak in a few years, too. Considering both, show that bumping will low down during the next years. Professor Kemp, of Aberdeen University, claims that oil prospecting must be measured by “first of all the exploration success rate and secondly the size of finds”. The supply of oil has fallen down during the years. Furthermore the size of new development is well below 40 million barrel of equivalent oil. Fact is, during the years technological progress has been made which brought down costs. The result of those improvements is an increasing productivity and a decreasing of investment- and operating costs. For example the overall costs per barrel have been cut into halves since 1980. Scientists are convinced that the long-term expectation depends essential on oil price behaviour. “The exploration of oil is generally financed from net cash flows, and full cycle returns to explorationists are very price sensitive“says Prof. Kemp.

The future of oil depends on “technological innovation and its widespread adoption” which will be very substantial. Some investigations that have already been made, show that there are more than 300 undeveloped oil sources, but a lot of them are very small and not economic enough. A solution of this problem might be to group a number of fields and develop them as an integrated group. Though, benefits can be divert by cost savings from common infrastructure sharing and risk sharing through the diversification provided by a group of fields.

The only way to achieve a large potential availability of ...

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The only way to achieve a large potential availability of oil from the remaining large reserves is to require continuous ingenuity by all stakeholders, oil companies, government etc.

“It is evident that the World will have to learn to use less (oil), much less, which should not be difficult given the current waste.” Claims Colin J. Campbell. Obvious is that he is a representative of the pessimistic side. This quotation shows a similarity to the opinion of Ted Trainer. He supposed that a growing population would need much more oil as an average industrial state needs today the “annual worldwide oil production would need to be increased about 30 times”. This is the reason why economists and geologists are convinced that our oil resources will be exhausted much faster than predicted.

Generally there are different approaches to measure the worldwide oil reserves. The first approach of all reserves do not equal resources; they are only a part of the resources. Fact is that various measurements exist about how much oil reserves are discovered, not discovered and in the future available. Laherrère is convinced that the reporting of oil reserves is “a political act”. This could be the reason why oil bumping countries like Saudi Arabia probably overestimate their resources with intention. Another point of view is Laherrère who states that the world is “moving in he wrong direction because of very poor data and erroneous interpretation”. He is convinced that sooner or later a world oil crisis will take place – and nobody will be prepared. It is very important to mention in this context that the life expentancy of an industrial civilization is around 100 years. Taking this into consideration an ending of the civilisation we know in 2030 will be estimated.

It is very hard to define the end of oil resources and when the society will be mature enough to realize that all human being are facing a tremendous problem. Probably it might be already too late or all human being have still enough time. But anyway, the society must be aware that sooner or later the world will be without oil and that alternative resources are necessary.