This being the case, the price of just about everything will shoot up. At this rate of consumption, how much oil do we have left? The Organization for Petroleum Exporting Countries reports that there are 1. These are proven reserves that are still capable of being extracted by commercial drilling. The world economy remains much more dependent on oil than most of us imagine.
Will the world economy be able to escape the grip of oil in the near future? The short answer is no. Even if we do nothing to address climate change, global demand for oil will decline, according to a new analysis from Bloomberg New Energy Finance.
Demand for gas in power plants will also fall. The industry will only be kept alive by demand for gas in buildings. The impact that an exhausted oil supply would have on our lifestyle largely depends on our ability to rely on alternative sources of energy. For example, even though solar energy is largely becoming a popular method of creating a renewable source of power, the unreliable nature of the weather and the limited amounts of electricity that solar technology can produce are setbacks that scientists face at present.
As you can imagine, transportation would be the main area that would be affected through a shortage in oil, and this is because this valuable commodity is refined in order to make the petrol we use to fuel our cars.
At the moment, although fuel prices are high, electricity prices are relatively modest. However, have you ever considered what an upsurge in demand for electricity would mean for the prices that are levied onto us by energy companies?
From an economics perspective, if demand for electricity outstrips supply, prices will continue to rise and this could mean that we will be more selective over watching the TV, surfing the Internet or having lights on in the house.
We could develop a mentality that unless we absolutely need it, electricity can be too expensive for us to use in our everyday lives. However, have you ever considered what an upsurge in demand for electricity would mean for the prices that are levied onto us byenergy companies?
Didn't find the answer you were looking for? Ask a Question. The price of oil is likely to be capped as the relative cost of oil substitutes becomes more viable over time. Whilst, as we have seen, oil reserves are unlikely to ever be completely emptied and deeper extraction methods and exploration for new reserves will become more expensive over time.
In this sense, as oil begins to become restrictively costly in the future, consumers will begin to shop around for alternatives. Or if no reliable or realistic alternative can be found, methods to use current resources more efficiently will be explored.
A nice analogy is as follows from an article by Macleans Think of economic output as the number of calculations it completes. It sounds dire, but it might not be. If technology does not improve, your choice will be simple: reduce the amount you run your computer to smooth resources over time, or use them up and then starve Now, imagine the computer technology improves such that its calculating efficiency increases each year.
It should, therefore, be more than possible to improve the way we extract energy from a dwindling resource over time. It might even be possible to extend oil use indefinitely if we can devise means of using it more efficiently. And that is before we even begin to talk about improvements in capital and labor productivity.
For example, even small increases in labor or capital productivity can lead to large increases in production per unit energy. Or put another way, it is very likely we will decrease the amount of energy per unit produced by necessity as oil supplies 'dry up'.
At least in theory. Just what the future holds for oil, and fossil fuels is still up in the air but what is clear is that we need to start using these resources more efficiently to extend their viability as a fuel source beyond Or, of course, switch to other energy sources like nuclear or renewables.
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