Future of Oil: Trends and Surprises

Abstract

Recent forecasts of an early decline in global oil extraction are just the latest additions to a long list of failed predictions. The timing of this event depends not only on the unknown quantity of ultimately recoverable crude oil resources, but also on the rates of demand growth, which are determined by a complex interplay of energy substitutions, technical advances, government policies and environmental considerations. Consequently, all past efforts to pinpoint the peak years of global oil output and its subsequent decline have been unsuccessful. And, even if the most pessimistic forecasts of an early end to the oil era were correct, we should not see the demise of today's cheap oil as a cause of major economic and political difficulties. Historical perspectives show that transitions to new energy sources have been a critical factor in human evolution, driving our inventiveness and shaping our complex societies.December 1998

ENERGY IN THE TWENTIETH CENTURY: Resources, Conversions, Costs, Uses, and Consequences

“…Once again, this outcome is not preordained (27). Advances in exploration and in oil recovery have been making available a great deal of new oil from old fields, and technical innovation has been steadily shifting the divide between conventional (liquid) and nonconventional oil resources.…”

“…Expectations of further large oil price hikes became the norm (27,70)-but a combination of lower demand caused by economic recession, conservation efforts, inroads by natural gas, and emergence of substantial non-OPEC oil supplies finally broke the cartel: In August 1985, with prices at about $27/barrel, Saudi Arabia stopped acting as a swing producer, that is limiting crude oil output in order to keep global supply and demand roughly in balance, and a year later prices fell to less than $10/barrel. The Gulf War caused only a temporary price blip (69; Figure 3), and post-1991 prices have been fluctuating in the zone between a monopoly ceiling above $30 and a long-run competitive equilibrium floor that Adelman put at less than $7/barrel (both figures 1990 dollars) (71).…”

The case for conserving oil resources: the fundamentals of supply and demand

“…Vaclav Smil (1998) has written: Energy transitions have been among the most important processes shaping modern industrial and post-industrial civilization, leaving deep imprints on the structure and productivity of economies as well as on the organization and welfare of societies. Historical perspectives show that every one of these transitions, from biomass fuels to coal, from coal to oil has brought tremendous benefits to society as a whole.…”

Bottom-up Aggregation of Field-Level Oil Production Profiles via a Successive Sampling Discovery Model and a Birth Process: An Application to the Gulf of Mexico and Norway

“…The use of such curve fitting models at aggregate levels where several have generated forecasts of an imminent peak in global conventional oil production has repeatedly generated controversy, and commentators seem divided into two groups of those who are "concerned" or "unconcerned" about the "future availability and affordability of oil" (Jakobsson et al, 2012, p. 861). Already in the year of publication of Campbell and Laherrère (1998), the opposing viewpoints were critically examined, for example, by Smil (1998). Recently, Bardi (2019) has discussed aspects of the debate on "peak oil" and the cycles it has undergone during the last 20 years in scientific or press articles including a decline in coverage in recent years.…”

“…Besides, there are several interrelated difficulties associated with phasing out the current work done by fossil fuels and replacing it with the new renewable energy systems. In particular, these include the high intermittency of renewable power generation, the high requirements of multiple potentially scarce metals, particularly for large-scale storage (Michaux 2021a;2021b), and a comparatively lower power density than fossil fuels (Smil, 2015). Also, the new renewables might have a lower energy return on energy invested (EROI) compared to fossil fuels (Hall and Day, 2009;Hall et al, 2014), although several EROI analyses available in the literature have been criticized in terms of methodological rigor (Raugei, 2023), and the issues of boundaries and methodological harmonization for comparative EROI analyses are still being discussed (Raugei, 2019;Murphy et al, 2022).…”