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The Oil Problem

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This system of price regulation will break down quickly as oil gets more scarce. How much oil is left? Why do oil prices jump around? ... – PowerPoint PPT presentation

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Title: The Oil Problem


1
The Oil Problem
  • Petroleum is the second most important resource
    in the world after water
  • Not only for fuel but for plastic,fertilizer and
    other chemicals
  • Unlike water, petroleum is not a renewable
    resource even if carefully managed
  • Therefore
  • We WILL run out of petroleum fairly quickly

2
How much oil do we use?
3
How much oil is left?
  • The amount of oil available for commercial
    recovery is called reserves
  • Reserves are a function of price as price goes
    up, new marginal deposits become profitable to
    exploit
  • This raises the supply, and in theory, could
    lower the price for a while
  • This system of price regulation will break down
    quickly as oil gets more scarce

4
How much oil is left?
5
Why do oil prices jump around?
  • Up until now, oil price instability has been due
    mostly to two factors
  • Upheavals such as wars and revolutions
  • Collusion (price fixing) by oil exporting
    countries and (probably) oil companies
  • Production bottlenecks (often deliberate) such as
    insufficient refining capacity
  • Often these factors happen simultaneously

6
What is Peak Oil?
  • The midpoint of global petroleum production
  • Oil production follows a bell shaped curve
  • Peak production occurs when about half the oil
    has been extracted
  • With some exceptions, this holds true for a
    single well, a whole field, an entire region, and
    presumably the world

7
Peak Oil at Different Scales
  • The amount of oil discovered in the US has
    dropped since the late 1930s. 40 years later, US
    oil production peaked and has fallen ever since
  •  World discovery of oil peaked in the 1960s, and
    has declined since then
  • If the 40 year cycle seen in the US holds true
    for world oil production, global peak oil
    production is right now
  • After the peak oil becomes less available, and
    more expensive

8
Projected Future Production
9
What Will Happen? Prices
  • According to most estimates we are at the peak of
    world oil production or will be there in five to
    ten years
  • After the peak, extraction gets much more
    difficult and prices go up permanently
  • Not many years after the peak oil will be so
    expensive that it will no longer be a practical
    mass source of energy
  • At that point, oil will be over

10
Alternatives to Petroleum
  • Nuclear is not a long term solution
  • Even if we could deal with the mess, fissionable
    materials are even rarer than oil
  • Solar and solar derived energy are the only long
    term solution, but they will take time to put in
    place
  • Solar derived includes photovoltaic (solar
    panels), wind, tide energy, hydroelectric, etc.
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