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Posts Tagged ‘Oil Work’

Are We Really Going to Run Out of Petroleum in My Lifetime, you ask. No, probably not, depends on how long you live (30-40 years more, probably not run out), but it will get very expensive to get the hard to get stuff, no more of this surface oil (crude) that costs merely $3 to $5 per barrel to extract from Middle East – estimates in Alaska are upwards of $11-15 per barrel.

Russian oil, hard to say, as there is a pay to play component, and companies cannot trust them (just look at their efforts to start a cartel for natural gas like the OPEC, NGEC – Natural Gas Exporting nations?). What about South America? Yes, issues there too, Geo Politics and conflict know no bounds when it comes to black-gold

Many are not looking there, we could be at war with China one day, or the Russians and Chinese could go to war some day over resources. You see, price points, new materials, economies of scale, hydrogen cells, better battery technology, alternative energy research all will play a part in this as well, so our future history is in no way written in stone, but there will be a long transition period, so things will come to a head and we are making the problems worse, by not having a legitimate politic-free energy policy.

We are our own worst enemy, we are blowing several great chances to secure and control our energy future, from oil to non-transportation energy – we need a plan, we need it now. A real plan, not some pie in the sky wishful thinking based on junk science. Please consider all this.

For as long as I can remember, I’ve been hearing that the world oil supply will run out in a few decades. I remember quite vividly growing up in the early 1980′s hearing that there wouldn’t be any oil left by the time I learned how to drive. Fortunately these predictions never came true, but the idea that we will exhaust all the oil under the surface of the earth is a persistent one.
Predictions that we will run out of oil after a certain period of time are based on an ignorance of the economic way of thinking. The typical way to estimate the number of years it will take us to run out of oil is to consider the following factors:

1. The number of barrels we can extract with existing technology.
2. The number of barrels used worldwide in a year.
The most naive way to make a prediction is to simply do the following calculation:
Yrs. of oil left = # of barrels available / # of barrels used in a year.

At least not in a physical sense. There will still be oil in the ground 10 years from now, and 50 years from now and 500 years from now. This will hold true no matter if you take a pessimistic or optimistic view about the amount of oil still available to be extracted. Let’s suppose that the supply really is quite limited.

What will happen as the supply starts to diminish? First we would expect to see some wells run dry and either be replaced with new wells that have higher associated costs or not be replaced at all. Either of these would cause the price at the pump to rise. When the price of gasoline rises, people naturally buy less of it; the amount of this reduction being determined by the amount of the price increase and the consumer’s elasticity of demand for Crude Oil.

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