Oil
Supply and Feasibility
In terms of feasibility, oil is so ingrained in modern society and its infrastructure is so well-established that there is no risk of not being able to integrate oil supplies into the economy and society. However, oil supply projections have a very interesting history, and like the price, projections of supply have been volatile. First of all, like natural gas, the calculation of proved reserves is subject to limitations of using current technology, economics, and known reserves, each of which can change from year to year. Like natural gas, for oil, proved reserves refer to "those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with a high degree of confidence to be commercially recoverable from a given date forward, from known reservoirs and under current economic conditions" (Credit: CIA Factbook [1]). The result (again, like natural gas) is that even though oil use is increasing globally every year, there are paradoxically more proved reserves. Please note that the chart below represents global proved reserves.
How is it possible that we can continue to use more oil each year, yet the estimated remaining supplies keep increasing? The primary reason is improving technology. We have so far been able to exploit new resources as the market demands more oil. The most recent increase in proved reserves, especially in the U.S., is from shale oil that can be extracted through hydraulic fracturing (aka fracking). There has been an oil boom that has come in lock-step with the recent natural gas boom, all due to fracking. Access to additional "unconventional" reserves via tar sands in Canada has also contributed to the increase in proved reserves and supply.
Suggested Reading
Dr. James Conca provides a very good explanation of the somewhat complex workings of the global oil market in the article below. As you will see, the price of oil and the economic feasibility of technology is not as simple as supply and demand. He also throws in a nice lesson on how fossil fuels are formed for good measure. Also, if, like me, you have found yourself wondering whether oil deposits are more like a jelly donut or tiramisu, he'll help you out with that as well.
- "No Peak Oil For America Or The World [4]" James Conca, Forbes Magazine
There are a few important things to point out from this article:
- Dr. Conca makes it clear that despite dire warnings of "peak oil" since the 1970s: "For every barrel of oil consumed over the past 35 years, two new barrels have been discovered." In other words, technology has increased the available oil despite the fact that humans have been using it at an increasing rate for over a century.
- For the past 15 or so years, fracking is the main reason that proved reserves have increased.
- Dr. Conca notes that: "Unfortunately, the environmental cost of unconventionals is even greater than for conventional sources." This is important to keep in mind, as fracked oil has the same negative impacts as fracked natural gas.
So, how much oil is left, and how long will it last?
- In 2017, BP released its well-regarded annual Statistical Review of World Energy [5] and determined that there is enough oil to satisfy global needs for just under 51 years [5], but only if we continue on our current trajectory. This is not a very long time if you think about how important oil is to society.
- Also, keep in mind that as we approach this point of exhaustion, the price of oil - and all of the goods that depend on it, which is basically, you know, everything - will increase.
Sustainability Issues
There are many sustainability considerations when it comes to oil. The following are some of the sustainability benefits:
- Oil is extremely important to the functioning of modern society. A little under 40% of all of the energy used in the U.S. is from oil, and in addition to that, oil is used in the manufacture of common things like plastic, car tires, and asphalt.
- Around 150,000 people [6] in the U.S. work in the oil and gas extraction industry, and possibly millions more [7] are "supported" by oil and gas.
- A lot of this helps provide some quality of life improvements, and even some equity advantages (e.g., cheaper food). But it does come at the expense of other sustainability aspects, particularly the environment.
However, there are of course drawbacks, including the following:
- One of the problems with not knowing how much oil is left is that it makes it easier to justify not planning for its eventual unavailability. When oil shocks happen, they have a severe negative impact on the economy. If we knew exactly how much oil we had left, society would be able to prepare for its demise. But because we do not know this with certainty, very little has been done to prepare for it. This is a sustainability issue for many reasons. Primary among them is that if we do not reduce our dependence on oil, there will be a lot of suffering when the next oil shock happens.
- Recall from the chart on the Sustainability of Coal page from this lesson that oil is second only to coal in global carbon emissions. There is no practical way to prevent the emission of carbon dioxide when an oil product like gas is burned.
- There are a number of other emissions [8] associated with the burning of oil products like diesel and gasoline, including nitrogen oxides and volatile organic compounds (which cause lung damage), sulfur dioxide (acid rain and some health impacts), particulate matter (asthma, bronchitis, visual pollution, possibly lung cancer), and others (Credit: U.S. EIA: Oil and the Environment [8]).
- All of the issues associated with fracking, in particular, the heavy use of water (see the Natural Gas page), are the same for shale oil.
- Another unconventional source of oil is Canada's oil sands (sometimes referred to as tar sands). 97% of Canada's known reserves [9] come from oil sands. Oil sand extraction is particularly damaging to the natural environment and has a very low EROI. Canada is the U.S.'s largest supplier of foreign oil (over 4 million barrels per day [10] in 2017), almost all of which is from oil sands.
- Oil is often associated with the so-called "resource curse [11]" when it is controlled by corrupt governments. This problem has historically been especially acute in African countries like Nigeria [12], but oil revenues have propped up many undemocratic regimes elsewhere, e.g., Middle Eastern Countries (Iran, Iraq) and South American Countries (like Venezuela).
Optional Reading
- "Equatorial Guinea Country Profile - Overview [13]." BBC News. When reading this, please keep in mind that Equatorial Guinea was a Portuguese, then Spanish colony for over 500 years prior to independence in 1968. It was used as a source of slaves by the Spanish for the last 200 years or so of that time. This level of exploitation is probably the most important factor in why countries like Equatorial Guinea are subjected to the "resource curse." The exploitation prevented them from developing the necessary political and economic infrastructure and personal freedom that would provide a buffer against exploitation by dictators.
- "The Dark Side of the Shale Bust [14]." Nick Cunningham, oilprice.com.
- "5 Years After BP Oil Spill, Effects Linger And Recovery Is Slow [15]." Debbie Elliott, NPR.
Oil is an extremely useful resource, and it is a very important aspect of the modern economy, and by extension, society. Considering that current projections assert that we only have about 50 years of supplies left, we should probably try to maintain our resources for as long as possible, and avoid an abrupt collapse. But we also should be conscious of the sustainability impacts of its extraction and use.