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There are a lot of different opinions concerning the oil industry’s future. However, all parties agree that this issue is a major concern to everyone. It speaks to our pockets everyday, it rings in our ears through the news, and its effects are visible in our environment. Oil is used in virtually everything we have today, from energy to even agricultural inputs (Campbell, 196). Additionally, its importance has led to financial, political and even security concerns (Stern, 1651).
That is why I picked out this topic, because it is such a big concern in the modern world. With so much speculation in the world with regards to oil, I think it makes for a good research. The specific issue about oil being explored in my essay is concerning its supply. I will explore the various opinions that exist and give the proof as regards the specific opinion.
To further illustrate this argument, I have picked out four stakeholders within the oil industry. All of the stakeholders will be arguing out their respective point of view from according to professional and personal interests. They will be used to offer the various opinions that exist concerning the future of oil availability in the world.
Mr. Jones (Geologist)
Hello. My name is Mr. Jones. I believe that the world’s supply of oil is about to run out, and we need to be prepared. Many of you are skeptical of this fact, especially considering how dependant we are on this precious commodity. However, I will show you that it is true, and our inability to act now is a ticking time bomb.
Oil utilization in the past century has increased exponentially; this is common knowledge. As of 2009, the average oil production was at slightly over 84 million barrels a day (Energy Information Administration). This figure is only set to rise over the next few years. The US is currently the largest consumer of oil, and the world is likely to catch up over the next few years.
This will take the total tally of international oil consumption from the 75 million barrels per day in 2004 to 120 million by 2030 (Smale). So internationally, we are increasing our use of oil without thinking of about its limited availability.
We have seen that the international consumption of oil is increasing at a very fast rate. However, we know that oil is a non-renewable resource. The rate at which it can be replaced, if it is replaceable, is so slow that it is negligible (Campbell, 199).
The only way you can drink water from a cup without finishing it is if its supply is infinite, or if it is too much to finish. Unfortunately, our cup of oil isn’t infinite, nor is it too much to finish. Here in the US, oil production peaked in the 1971 (Speedace). Other countries have followed, and internationally Goldman Sachs predicted that oil would peak in 2007.
Oil peaking means that the oil reserve has reached its largest extraction capacity; production from then on is set to decline (Porter, 187). If you do not believe his prediction was true, then you have not been listening to the news. Already, countries have started announcing that their oil reserves have significantly declined in capacity. Even the greatest suppliers of oil in Middle East have recorded dwindling capacities (Porter, 187).
So there we have it, the truth about oil. We are currently consuming more than we can consume in a sustainable way. Additionally, due to population pressures and international growth, we are set to increase our consumption of oil. This is all happening in the backdrop of a limited supply of oil. Since oil is not replaceable, logic clearly tells us that we are going to finish our oil reserves. The truth is all there in the statistics.
Mr. Abdul (Oil Ship Tanker Owner)
My name is Mr. Abdul. I am very worried about the lie that is being peddled around that oil is about to end. The truth is we are not anywhere near finishing our consumption of oil. Switching from oil simply because we are preparing for its running out is simply preposterous.
The people who are arguing about oil peaking are not taking full information to account. Peak oil theory is an old theory, formulated before 1970 (Speedace). The creator of this theory did not have the advantage of the information made available to us through improved technology. Technological advancements have made it possible to efficiently search and drill for oil. These people are using theories formulated before technology considerably advanced to argue about an issue that we now have proper information concerning.
Additionally, everyone is giving contradictory statements about how long oil will last. They are using elaborate and educated guessing techniques to give us their wrong conclusion. Some skeptics are even giving us a paltry 10 years worth of reserve (The Insider). However, the truth is that at worst, we have 1,000 billion barrels worth of oil, an amount that is sustainable for at least 40 years (Smale). This also has not taken into account future explorations.
The truth is that our salvation lies in the use of technology. The latest of these technological achievements is the use of 3D technology to hunt for oil virtually (Schoen). This technology increases the efficiency of hunting for oil. It eliminates the inefficiency of using 2D maps, where locating an oil well and evaluating its potential was an exercise of part expertise and part guesswork.
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Today, the use of tedious oil exploration methods has been exchanged in favor of new and efficient methods. This method alone has allowed the exploration of oil fields and even allowed experts to venture further into the ocean. You see, there is oil out there; it is just that we cannot effectively look for it. Imagine the potential held in exploring oil offshore. Offshore exploration of oil is both a very big opportunity and challenge (Schoen). However, technology holds the answer. We therefore have new places to search and previously explored places to efficiently exploit.
Additionally, technology offers us the opportunity to seek oil from other sources, like coal (Schoen). The cost of extracting one barrel of crude oil from coal was estimated at $35 per barrel, a cost that could go even further down if this kind of extraction is perfected (Speedace). A ton produces approximately 52 gallons of crude oil, with useful by products also resulting from the process. Previously unconventional sources such as bitumen and oil shale are also in the process of being utilized (Speedace).
You see, there is nothing to worry about; oil is not running out. We simply have not efficiently explored and exploited it.
Ms. Renaldo (Financial Analyst)
Let me attempt to clear the air concerning the truth about oil’s future. Indeed, it is very clear that oil has become of much importance to all of us, especially in light of its economic implications. What I am about to tell you is an inconvenient truth. However, the inconvenience will only increase if I do not tell you. The truth is this: oil is not getting finished soon, but its price is not coming down either.
Let me explain why. Those who claim that oil is running out are looking at the picture from the perspective of traditional extraction methods. Traditional methods of extracting oil are inefficient since they leave large quantities of usable oil still untapped. There are primarily three methods of extracting oil. The primary method is the easiest. This happens when oil flows out of the ground under its own pressure.
Using this method, approximately 20% of the oil reserve is extractable (Speedace). The secondary method needs pumping mechanism. With this method, between 25-35% of the oil reserve is accessible (Speedace). When we put in the third level of extraction, we can extract an additional 5-15% of the oil (Speedace). In total, on the plus side, we can extract 50% of the reserve. The rest of the reserve is too difficult to access using traditional methods. Therefore, using traditional methods, oil will arguably run out.
The problem with the extraction stages is that they expose us to increased costs as we progress up the stages. As we move from one method to the next the cost of extraction increase. The tertiary process uses a complicated steam process to aid in the extraction, a method that is undoubtedly more expensive than allowing it to flow off naturally.
This is the reality we will increasingly face as we pursue oil extraction. Oil extraction will only become much more expensive due to extraction costs as we continue to pursue their extraction to greater extents.
In Canada, for example, they discovered oil in the sands of Alberta. The oil extraction process here involves extracting the bitumen in the sands (Graham). This is an expensive process as it requires an incredible one ton of sand to produce only one barrel (Graham). In newer techniques, they pump steam into the ground, allowing the tar to melt and then pump it to the surface (Graham). This is still not cheap. It takes a lot of steam and energy to extract the oil using this method (Graham). Desperate scenarios like these are being seen all over the oil industry as they move to secure the “inaccessible” reserves.
There is a whole frontier of unexplored territory in the ocean. This could prove to be very good for boosting the total oil production. However, this method has many expensive challenges. Building oil rigs in the middle of the ocean, surviving harsh ocean weather and pumping the oil to a receivable place are but a few of the expenses that oil this new process will face (Schoen).
In short, there is a lot of oil out there that is not in being extracted properly. Increased international demand will not allow companies to sit around without finding ways of extracting oil from previously unconventional sources. However, the oil is expensive to extract. This will force the price of oil upwards due to its high production cost.
Dr. Green (Environmental Researcher)
Ladies and Gentlemen: we are in a crisis. The world is dependant on energy, and the greatest energy source we know is oil. We have used it and crippled ourselves in the process. However, we are at the beginning of a new era: the post-oil age. Humanity is fast realizing the evil of its oil addiction and began to look for new ways of satisfying its need.
Arguably the biggest motivators to explore alternatives are financial and political (Campbell, 205). The dependency on oil by the US has exposed it to political manipulation by the Middle East (Rodger, 1652). This precious commodity is so vital, that the Middle East have found it a convenient tool to bully the US.
Additionally, the Middle East’s political turmoil has exposed the market to economic shocks due to its strategic holding of most of the world’s supply of oil (Campbell, 194). The world’s biggest economy, the US is currently pursuing alternative energy as a very real alternative. An alternative would release it from this burden of being at the whim of oil speculation and manipulation (Rodger, 1651). The cost savings would be gladly used in some other segment of the economy that would need help.
Additionally, environmental concerns are also a motivation. By ensuring that we switch from polluting, non renewable energy sources to other cleaner alternatives, we come closer to reducing the drastic effects of global warming. The climate change subject is on the lips of everyone internationally, and switching from oil is arguably the single biggest conservation effort possible on the planet.
To prove that the investments in pursuing alternatives are real, one has only to look at the stimulus package announced by Obama. Out of the total package of $787 billion, $150 billion was pledged to the cause of renewable energy (Marquez). This is 19% of the total stimulus package.
Additionally, big shot investors, the likes of Warren Buffet, have started to financially position themselves to take advantage of an expected boom in the alternative energy sector (Marquez). Finance is one of the biggest motivators of change in any sector, and with the kind of investments being made in alternative energy, a solution is sure to pop up.
If you think that the replacement is somewhere far in the distant future, then you are wrong. Already, significant progress is being made in finding an alternative. From biofuels, hydrogen to battery power, new alternatives of energy are being heavily pursued on a real time basis.
Already, we have seen the car industry pioneer hybrid cars that run on electricity. If this industry alone successfully manages to wholly switch to a viable alternative, the reduction in the amount of oil in use would be extremely significant. Alternative energy is indeed a reality.
The oil debate is clearly riddled with many different view points, as the characters have show. However, the most important debate should not be about how much oil is left, but how we are going to solve the financial and environmental problems that oil gives us. Indeed, technology does hold the answers to most of the riddles that oil supply brings.
We either find innovation that makes oil supply cheap or find technology that renders it incomplete. Personally, I am in favor of the second option, do away with oil altogether. This way, we avoid the problem altogether and drastically reduce the environmental damage that we have done to our earth courtesy of oil.
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Porter, Richard. “Review.” Journal of Economic Literature 44.1 (2006): 186-190. Print.
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