Alternatives for oil have already began. The peak oil theory sees the Hubert curve (Hubert from the Shell Company created this theory), which sees oil production increasing at one point, but then decreasing. The curve works for any limited natural resource. The curve predicts a “steep fall off, or a high rate of decline of production” as existing assets go down. Peak oil debates tend to argue that global oil production will decline too fast for the world to develop sufficient alternative sources of energy to replace the use of oil.
Shell doesn’t promise to peak oil theory but agrees that since the year two thousand the demand for oil has increased. Research shows that demand for oil will continue to increase, the highest being 2.5%. At this rate, the demand in the year 2030 will be more than double what it was in 2000. Shell is not promising to pursue the oil peak theory, however the company does agree that oil is being depleted in the Middle East. Shell has been looking for options. Some of the options include stepping up the progress on renewable resources.
The environmental lobby, however, is strongly opposed to oil sands exploitation, arguing that they are easily one of the worst (most polluting) forms of energy. Some argue that the extraction of oil from oil sands creates “three times the carbon emissions of oil production and destroys the local environment. Oil shal is worse according to many other companies.
It is very important to fin better ways of replacing consumption of oil with probably renewable resources. The demand is increasing and natural resources are decreasing.
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This [peak oil] is certainly something that major oil companies should be mindful of and continue to plan their exploration efforts accordingly. Despite a great deal of confidence that oil companies have in technological improvements, at the rate the world is currently increasing its use of oil (especially considering the explosion of use from emerging economies such as China and India), if there is not serious energy devoted to a greater push toward sustainability on the part of the oil companies, they will likely see a good portion of their market share slip away from them. This would happen not from declining sales, necessarily, rather from stagnation in the total increase of consumption should the trend toward alternatives gain greater traction (which is merely a matter of time).
ReplyDeletehttp://blogs.wsj.com/source/2010/09/01/oil-price-ignores-long-term-supply-worries/?KEYWORDS=peak+oil
Blogger kept giving me errors while posting comments last night so I'm trying again.
ReplyDeleteI agree with Nick, and I think that the peak theory is also influenced by the time horizon aspect of economics. The supply and demand are already being affected by peak oil, but the outside variable of a changing market price as a result of time horizon (how long item X can be priced at X) is also affecting production decisions which should, at some point, affect the dynamics of the market.