Welcome back my fellow learners, today we are going to learn what happens when oil resources run dry.
What will happen when we eventually run out of oil?
This is the big question, that is brought up daily in newspapers, and was raised recently by Gary Mason from the Mail and Globe. He stated that “should you believe that today's economy is structured in a way it needs to grow to be able to survive, then it could take an endless supply of energy in order to feed it, he carries on with, “how, will an economy continue to grow if the one thing it requires more than anything to survive is contracting with time?” Statements such as this, represent a misunderstanding of resource economics, growth and energy intensity of the today's economy.
Will we actually run out of oil? Surely it cannot be that simple, however, the plain fact is, it is that simple.
People can only pay for a barrel of oil so long as it performs valuable work, and as long as that work is not done more cost effectively using an alternative source of energy. The price is capped, not just by a product’s usefulness, but by its costs of alternative ones. There are always going to be barrels of oil that are simply too deep to extract, or never discovered because it’s not worth checking areas which are too expensive to develop given the current market for oil.
However, right now the boffins are experimenting with alternative fuel sources, which the hierarchy are back burning. And why is that I hear you ask, well the answer is as old as time itself, MONEY. Should people begin to use an alternative fuel source, the oil profiteers will stand to lose millions. So it is more cost effective for them to actually buy a persons invention and mothball it, than bring it to fruition.