226 PETROLEUM TECHNOLOGY, ECONOMICS, AND POLITICS
There are assumptions that renewable sources of energy will
come on stream just in time to take over from oil. All that is
required is to wait for the price signal insofar as when oil becomes
more expensive, energy from alternative sources will be immediately available and solve the energy problems. The unanswered
question related to fiscal actions taken by the OPEC nations that
might deter governments from tackling and funding the development of the more expense alternate energies. One also has to
wonder if the politicians at various levels of government are willing to tell their respective constituents that, for example, gasoline from a renewable source will cost more than gasoline from
petroleum at the risk of losing votes and a their respective seats
in government.
In addition, the development of alternative energy sources
to fill the void left by the end of petroleum will take time. The
development of renewable energy systems needs to be supported by decisive, well-coordinated action by governments,
in sustained multi-decade programs. Only then will renewable
sources be poised to supplement petroleum. Obviously, if the oilconsuming nations wait for the market to give the price signal
that renewable forms of energy should now be developed, the
effort we start 25 years too late and there will be a destabilizing
energy gap.
The economics of oil is now dominated by its close proximity
to the output peak. The steep decline in the discovery of oil since
1965 means that production must eventually decline beyond a
point of no return. Recent rises in oil prices suggest that the very
high prices associated with the summer of 2008 and the fluctuations to more moderate prices are temporary. The tension between
demand and the reduced growth in supply can be expected to
raise prices again. When the consumers begin to believe that the
price in the future will be higher than the price for delivery, there
will be a rush to buy up short-term contracts leading to new price
equilibrium, but at a much higher level. This may even be a signal to producers that the longer they leave the oil in the ground,
leading to a higher price for oil resulting in a stalemate between
high prices and flattened demand before supply collapses into a
decline.
The consequences of such an economic turndown will affect the
two main purposes for which oil is used: food and transport.
There are assumptions that renewable sources of energy will
come on stream just in time to take over from oil. All that is
required is to wait for the price signal insofar as when oil becomes
more expensive, energy from alternative sources will be immediately available and solve the energy problems. The unanswered
question related to fiscal actions taken by the OPEC nations that
might deter governments from tackling and funding the development of the more expense alternate energies. One also has to
wonder if the politicians at various levels of government are willing to tell their respective constituents that, for example, gasoline from a renewable source will cost more than gasoline from
petroleum at the risk of losing votes and a their respective seats
in government.
In addition, the development of alternative energy sources
to fill the void left by the end of petroleum will take time. The
development of renewable energy systems needs to be supported by decisive, well-coordinated action by governments,
in sustained multi-decade programs. Only then will renewable
sources be poised to supplement petroleum. Obviously, if the oilconsuming nations wait for the market to give the price signal
that renewable forms of energy should now be developed, the
effort we start 25 years too late and there will be a destabilizing
energy gap.
The economics of oil is now dominated by its close proximity
to the output peak. The steep decline in the discovery of oil since
1965 means that production must eventually decline beyond a
point of no return. Recent rises in oil prices suggest that the very
high prices associated with the summer of 2008 and the fluctuations to more moderate prices are temporary. The tension between
demand and the reduced growth in supply can be expected to
raise prices again. When the consumers begin to believe that the
price in the future will be higher than the price for delivery, there
will be a rush to buy up short-term contracts leading to new price
equilibrium, but at a much higher level. This may even be a signal to producers that the longer they leave the oil in the ground,
leading to a higher price for oil resulting in a stalemate between
high prices and flattened demand before supply collapses into a
decline.
The consequences of such an economic turndown will affect the
two main purposes for which oil is used: food and transport.