Readers Question: when will oil run out?
It is difficult to say.
Firstly on the demand side, demand for oil is rising faster than many expected. This is largely being driven by rising growth in developing economies such as India and China. Today we consume an average of 85 million barrels daily. According to the most conservative estimates from the International Energy Agency, that figure will rise to 113 million barrels by 2030.
On the supply side, the known reserves of oil varies between 1 trillion barrels and 3 trillion.
Unknown Reserves
The amount of oil reserves is uncertain. For example, there could be a lot in the Antarctic. At the moment, this continent is relatively unknown. However, as oil prices rise, it will become difficult for countries to resist the temptation to increase supply in these fragile areas.
Steady Decline of Oil.
Most oil analysts argue that the production of oil tends to follow a bell curve distribution. Reaching a peak before slowly declining and tailing off towards the end.
Will the Market Provide an Alternative?
The other issue with oil running out is that market forces may encourage alternatives. As supply falls and demand continues to rise, the price of oil will increase. As the price of oil increases, people increasingly find alternatives to oil. With oil at $100 a barrel, it is still economical to use oil, but, if the price of oil doubled to $200 it may become economical to use alternative energy sources such as solar panels, natural gas. Therefore, it may be that the supply of oil never runs out, there will simply come a point when no one wants to use oil any more.
The Tipping Point
An important point will come when the amount of oil reserves is less than the total amount of oil consumed. After this point is reached, prices of oil will rise sharply. The rising prices may encourage new oil exploration, but, there will come a point when it is more economical to develop alternatives.
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