Here is Hubberts actual curve developed in 1956 for the US m

Here is Hubbert\'s actual curve (developed in 1956) for the U.S., mapped against actual production.

And here is an actual world wide production curve, based against the discovery of new oil fields by Exxon Mobil

In any case, there is a finite amount of oil that is there.

In their June 2017 report, BP compared the known, proven reserves and calculated at the present production rate, the reserves will last 50.7 years.

So this week I want you to discuss what all this means with respect to our use of oil as an energy source going forward.  Figure 9-9 on page 109 of Global Warming uses Hubbert\'s Peak\'s to show when the peak production occurs under the two estimates.

1. What do those peaks, and the information in BP\'s latest report tell us about the future use of oil?

2. Based upon the curves, when should we see that production start to go down? (Remember, in this context, production is not what goes on at the refinery, it is what comes out of the wellhead).

3. If nothing changes in the way we use energy, what will happen to the price of oil when production goes down?

Don\'t forget about the fact that petroleum products are used for many things other than energy. Can you name some of them?

US Annual Oil Production and Hubbert\'s Curve 3.5- 3.0- 2.5- Billion Barrels Per Year Production 1.5- 1.0- Hubbert\'s Curve 0.5- 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

Solution

1. If we talk about the future use of oil then the second graph shows it clearly that the use of the oil has always seen an upward trend. And going by the trend analysis we can see that it is expected that the use of oil will increase future. even the reising global warming is a sign that teh excessive use of oil was in past, in present and will be in future.

2. Accoring to the Hubbert\'s curve and actual production curve the amximum was attained in the phase of 1960-1970s. After that the production has seen gradual fall only. This can be further supported with the decresing rate of descovery of oil fields in the recent past. And looking at the future forecast of discovery of oil we can see that it will be decreasing futher.

3. According to many principles of economics, the scarcity of anything defines the price. So as the usage keeps on increasing or nothing change in the way we use it, then the oils will become scare, which will lead to decrease in the supply. Demand will be increasing where as the supply will decrease. So to maintain the equlibrium the price has to rise so that the market perform effeciently. Hence we can expect quite a bit increase in the price of the oil.