Oil: Too little, too much, running out?

The “problem” is normally phrased in terms of supply and demand

• The world (especially Global North) is seriously addicted to petroleum

• Large & cheap deposits have been easily accessed

• But future sources cannot meet growing demand

• As production declines, prices will rise

• This will be very costly & could lead to conflicts & “oil wars”

The “solution” is not entirely clear

• Produce more energy: what kind, how, where?

• “Drill, baby, drill!”• Assert military control over

remaining resources• “Ecological modernization”

to reduce energy use• Radical conservation

through very high energy taxes

• Decentralization: everyone makes their own energy

How much oil is there?

Remaining U.S. sources are limited

U.S. oil production and reserves have been in decline since the mid-1970s

it takes 28 m3 (1000 ft3 ) of natural gas and from 2.5 to 4 barrels of water to produce one barrel of bitumen.

Which is why Canadian tar sands are of such interest

Many would argue that we will find new petroleum & energy sources

• As production & supplies decline, prices will rise

• This will pull more costly oil sources into production

• Substitutes (e.g., ethanol) will penetrate the market

• Alternatives will become economically attractive

• We will never “run out of oil,” because demand will decline & it will be used for other purposes

Do we see oil prices rising?

Perhaps there is too much oil!

• Industrial society has had access to too much cheap oil

• We have a “right” to low-cost oil & energy

• No incentives to use it more carefully

• Strong incentives to sell as much as possible

• Disruption of earth’s carbon sequestration systems

• Unforeseeable consequences

What is the “true” price of gasoline (per bbl)?

• “Marginal Production cost”: $75• Ecosystem services: $55• Cumulative env. impact ($1/yr

for 50 yrs.): $50• Cumulative social impacts ($2/yr/

for 50 yrs.): $100• Military protection: $25• Opportunity costs: $100• Producer profit: $60• Total: $465/bbl or $11/gal• (Might be too low or too high by

a factor of two)• What is to be done?