Non-renewable fossil fuels clearly cannot last forever. In particular, serious concerns have been raised over the future of the global oil supply. Over 95% of the oil currently in production is “conventional” oil which is easy to extract (Méjean & Hope, 2008). Non-negotiable physical constraints influence the speed at which such oil can be pumped, and output from a single well (or aggregated over a whole region) inevitably rises to a peak and then declines (Sorrell et al., 2009). The point at which the global peak production rate is reached is generally referred to as “peak oil”. Despite a wide variety of estimates concerning its timing, a growing number of calculations suggest that it is likely to occur somewhere between the present day and 2031 (Greene et al., 2006; International Energy Agency [IEA], 2008; Sorrell et al., 2009; Vernon, 2009).

If a shortage of oil occurs the price will rise until some customers are priced out of the market. As prices rise, more expensive extraction technology and unconventional oils can become economic, slowing the decline in production but at the expense of higher production costs. The overall effect is rising prices, but the shape of the rise is hard to predict.

High oil prices have serious effects on wider society. The prices of all fuels are linked to a degree (Nuclear Energy Agency [NEA] & IEA, 1998). There are good reasons to believe that a peak in oil production will not lead to a smooth painless transition into a post-oil world unless conscious intervention is employed (Hirsch et al., 2006; Sorrell et al., 2009).

To keep global temperatures within 2°C of pre-industrial temperatures, cumulative CO₂ emissions must be kept below the amount that would be produced from burning the remaining proven economically recoverable fossil fuel reserves (Schmidt & Archer, 2009). Therefore fossil fuel depletion is unlikely to adequately solve climate change for us. However, it provides a further incentive to invest in alternatives to a fossil fuel-based infrastructure.

In conclusion, there is good reason to believe that conventional oil may soon be reaching its production peak and it would be advisable for this reason alone to reduce the oil dependence of our society and transport system. Furthermore, because there are good reasons to expect significant future volatility in international fuel prices, a renewable electricity generation infrastructure which has no ongoing fuel cost is likely to give us a more stable and secure electricity system.

References:

Department of Trade and Industry (DTI) (2007) Meeting the Energy Challenge: A White Paper on Energy, London: The Stationery Office. 

Greene, D.L., J.L. Hopson & J. Li (2006) “Have we run out of oil yet? Oil peaking analysis from an optimist’s perspective”, Energy Policy, 34(5), pp. 515-531.

Hirsch, R.L., R. Bezdek & R. Wendling (2006) Peaking of World Oil Production: Impacts, Mitigation, And Risk Management, New York: Nova Science Publishers. 

International Energy Agency (IEA) (2008) World Energy Outlook 2008, Paris: Organisation for Economic Development/IEA. 

Méjean, A. & C. Hope (2008) Modelling the costs of non-conventional oil: A case study of Canadian bitumen, Cambridge Working Papers in Economics 0810, Faculty of Economics, University of Cambridge.

Nuclear Energy Agency (NEA) & International Energy Agency (1998) Projected costs of generating electricity: Update 1998, Paris: Organisation for Economic Co-operation and Development (OECD).

Oil and Gas UK (2004) “Gas - The UK’s Fuel of Choice”, Oil and Gas UK [online]. Available at: http://www.oilandgas.org.uk/issues/gas/ [Live: January 2010].

Schmidt, G. & D. Archer (2009) “Climate change: Too much of a bad thing”, Nature, 458(7242), pp.1117-1118.

Sorrell, S. et al. (2009) Global Oil Depletion: An assessment of the evidence for a near-term peak in global oil production, London: UK Energy Research Centre. 

Vernon, C. (2009) “Peak oil”, presentation given to the zerocarbonbritain2030 Carbon Crunch seminar, 31 March 2009 [unpublished].