Study of Peak Oil and Gas Essays

Study of Peak Oil and Gas Essays Study of Peak Oil and Gas Essay Study of Peak Oil and Gas Essay In 2004. the universe production of oil was estimated at merely over 29. 7 Bbl. The corresponding universe ingestion for oil during the same period was estimated at 29. 6 Bbl of oil. go forthing a excess of merely under 0. 1 Bbl at the terminal of the twelvemonth. In the United States. one of largest consumer markets for oil and oil merchandises. from the first hebdomad in September 2004 to the first hebdomad in September 2005. gasolene monetary values increased by a astonishing $ 1. 22 per gallon to $ 3. 12 before dropping to $ 2. 25 on November 21. 2005. These figures are rather reeling sing that contracts for petroleum changed custodies at 10 USD/barrel in 1999. With the outgrowth of China in the planetary market and its increasing demand for oil. it is projected that unless oil companies are able to increase the universe production by puting investing in oil and natural-gas production oil monetary values could increase exponentially over the following 10 ( 10 ) old ages. The obvious factor in finding the supply of oil in the universe is the sum of oil that can really be extracted and processed. Oil is basically a non-renewable energy beginning and can non be replenished once it has been extracted from the land. The function of oil companies and states is non in the existent production of oil but in it rationing. A web of scientists called the Association for the Study of Peak Oil and Gas ( ASPO ) which is affiliated with a broad array of planetary establishments and universities surveies the depletion rate of oil. ASPO surveies concern themselves in finding the day of the month and impact of the extremum and diminution of the world’s production of oil and gas. due to resource restraints. The ASPO uses the Peak Oil Theory or the Hubbert Peak Theory which is a method of patterning known oil militias and production rates and routinely used by oil companies to foretell future outputs of bing oil Fieldss ( Legget. 2005 ) . Using this theoretical account. it has been projected that the universe oil production growing tendencies. in the short term. have been diminishing over the last 18 months. Average annual additions in universe oil production from 1987 to 2005 were 1. 2 million barrels per twenty-four hours ( mbbl/d ) ( 1. 7 % ) . Global production averaged 84. 4 mbbl/d in 2005. up merely 0. 2 mbbl/d ( 0. 2 % ) . from 84. 2 mbbl/d ( 13. 4 million m? /d ) in Q4 2004 ( Legget. 2005 ) . ASPO predicts that conventional plus unconventional oil production will top out around 2007 What this information fundamentally means is that the current supplies of oil all over the universe are being depleted and newer beginnings have non yet been discovered. To convey the supply of oil up once more. oil companies must put more in turn uping more oil Fieldss and besides develop new engineerings to better the current refinement processes to let for a more efficient production of oil. This first factor in the supply of oil is fundamentally dependent on the existent sum of oil that can be produced and processed and besides considers the capacity of oil companies to polish oil more expeditiously and to tap other beginnings of oil ( Deffeyes. 2005 ) . This factor nevertheless besides to a great extent depends on the capital investings that oil companies make in the oil industry. One of the chief factors which affect the demand for oil is the monetary value of oil. But given the fact that oil is a necessary resource and that it is a non-renewable energy beginnings. the supply can fundamentally merely remain at a certain Peak degree depending on the sum which can really be processed and the demand besides remains at a certain degree even if oil monetary values continue to lift ( Case. 1999 ) . Normally. if the resources were renewable. there would be perfect snap between the supply and the demand in proportion to the addition or alteration in the monetary value. Therefore. if the monetary value of oil were to increase. it would theoretically ensue in the demand for oil to diminish ( Case. 1999 ) . This premise nevertheless can non be applied to the instance of oil because. as mentioned earlier. oil is a non-renewable resources and remains as the primary beginning of energy in the universe today. This shows the inelastic demand for oil. The ground for this is that since oil remains the chief energy beginning in most states. the demand for oil will stay changeless despite the alterations in the monetary value of oil ( Case. 1999 ) . While theoretically it is expected that there will be a greater demand for oil if the monetary value lessenings. it is of import to factor in the fact that more authoritiess around the universe are implementing energy salvaging policies every bit good as seeking to cut down to dependence on oil as an energy beginning by developing alternate beginnings of energy ( intercrossed autos. solar power. hydroelectric power ) ( Simmons. 2005 ) . The fact that oil is a non-renewable resource must besides be considered. The following factor which affects demand for oil is the handiness of alternate energy beginnings which are cheaper ( Bilgen. 2004 ) . The presence of replacements in a market allows the demand for oil to diminish if the monetary value continues to increase ( Case. 1999 ) . Before discoursing this factor. it is of import to retrieve that the development of alternate energy beginnings is non in proportion to the increasing rate of demand for oil. The presence of replacements in a market affects demand because any addition in the monetary value of the trade good means that the consumers have an alternate and can take down their demand for the trade good and purchase the replacement alternatively ( Case. 1999 ) . The same rule applies for oil except that it must be remembered that the development of these replacements or alternate beginnings of energy takes a well longer sum of clip than conventional replacements. However. under the premise that there are already alternate beginnings of energy available in the market. it can be expected that the demand will respond consequently to any addition in the monetary value of oil. The dependance on oil as an energy beginning will diminish therefore cut downing the demand for oil in proportion to the monetary value additions ( Pimentel. 1998 ) . The challenge remains nevertheless for states and authoritiess to happen ways to happen alternate energy beginnings to cut down the universe dependance on oil as an energy beginning and ease the load that the increasing monetary values have on the consumer. While the authorities may efficaciously modulate its usage. the best solution is still in the development of energy replacements for the market ( Pimentel. 1998 ) . Other factors which besides have an consequence on the demand for oil are things such as the authorities ordinances on the usage of fossil fuels. energy salvaging runs and environmental ordinances. The authorities can implement these steps by increasing revenue enhancements or enforcing mulcts. The consequence that this has on demand is simple. The authorities ordinances efficaciously cut down demand because the consumers are restricted from purchasing more oil. By promoting the execution of energy salvaging policies. oil ingestion is besides greatly reduced therefore impacting the demand. The demand for oil therefore is affected by many factors such as monetary value. handiness of replacements. and authorities intercession in the signifier of revenue enhancements. energy ordinances and monetary value controls. Mentions: Bahree. B. ( 2006 ) Investing by Oil Industry Stalls November 8. 2006 Wall Street Journal November 2006 Bilgen. S. and Kaygusuz. K. ( 2004 ) Renewable Energy for a Clean and Sustainable Future. Energy Sources 26. 1119 Case. K. and Fair. R. ( 1999 ) . Principles of Economics ( 5th ed. ) . Prentice-Hall Deffeyes. K. ( 2005 ) . Beyond Oil: The Position from Hubbert’s Peak. Hill and Wang publication House. Hill and Wang United States Leggett. J. ( 2005 ) . The Empty Tank: Oil. Gas. Hot Air. and the Coming Financial Catastrophe. Random House. Pimentel. D. ( 1998 ) . Energy and Dollar Costss of Ethanol Production with Corn Hubbert Center Newsletter. 98/2. M. King Hubbert Center for Petroleum Supply Studies. p. 8. Simmons. M. ( 2005 ) . Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Random House