Aside from potential concerns about the stability of oil supplies from a geo-political perspective, the rise in oil has in part revived concerns that peak world oil production rates have been reached. Once global oil production begins an inevitable decline, demand must similarly be reduced, if necessary by ever increasing price levels. “Peak oil” is more than a theory. A limited quantity of hydrocarbons does exist in the ground, and at some point, those supplies will be uneconomic to recover. However, a history of oil reserve estimates shows that technological advances and real price increases – which should drive the willingness to explore in more difficult to reach areas – can stretch available supplies.
Oil producers, for example, have used technology to roughly double potential yields from existing deposits over time, and technology is not known for standing still. The last estimate would represent nearly 100 years of daily supply at the current global demand pace, and excludes very unconventional supply resources. But these supply estimates are controversial, disputable, and unobservable until realized by actual production. Leaving issues of global climate change completely aside, I believe political factors might be playing a bigger role in determining available oil supplies than the level of the world’s unconsumed reserves.
Next question: how long we can stay without oil?
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