The future of oil

Oil has been the fuel our world runs on since the mid 1900's. Even though oil was used in the 1800's for basic stuff like oil lamps, the discovery of the world’s first commercially viable oil well in the 1900’s was the spark. It came at a time when emerging technology created new products that can be produced from oil. Since then, oil consumption grew exponentially because of many factors like the increase in demand for vehicles, gasoline, diesel, and heating fuel.

Even though oil is used globally, the biggest demand always comes from developing nations. This need is due the increased consumption by both the government and consumers, which leads to higher demand for oil based products. Oil is used to make popular products like transportation fuel, fuel oils, and less obvious products like cloth, tires, luggage, helmets, umbrellas, and many more that can be seen in the picture below.

picture from visualcapitalist.com

Nonetheless, as emerging markets are increasing demand for oil, the developed world is moving to green energy. Climate change concerns throughout the world are causing significant regulations to promote plug in electric cars, but these forces are slow and will take around 10 years at least. These forces are slow because the world’s economy and infastructure is invested in fossil fuels to a truly astounding level that non-experts can’t rap their heads around. Because of the slow decline, oil companies will have enough time to update their business models to the new norms or upcoming technologies -or acquire them.

Electric cars can put an end to the majority of oil comsuption, but they require significant improvements in technology and battery, and the building of charging infastructure throughout the world to be considered as a global replacement. As James Woolsey said “We aren’t addicted to oil, but our cars are.” Companies like Tesla are on the right path to make this a reality. The underlying technology for electric cars is credible, but the costs of these cars are far too high for developing countries. However, in developed countries, electric vehicles are on the rise. Recently, BP has entered into an agreement to buy chargemaster, an electric vehicle charging company, which has more than 6500 charging stations throughout the UK. BP has also invested in a startup, StoreDot, which could ultimately fully charge a car in five minutes. Even though oil comapnies like BP are investing in electric cars, the vast majority of R&D in spending is focused on unconventional oil, not replacing oil.

Despite the increasing use of renewables, global oil demand has been rising each year by 1.5 million barrels per day (up 8% in the last five years.) In addition, there is no credible projection to show this trend changing in the near future. If demand for oil keeps increasing while supply is decreasing, we will see highly inflated oil prices. The peak gas/diesel is predicted to be in the late 2020s to mid 2030s. If this happens, we can see new products introduced, like coal to liquid processes that were used by the Germans in WWII (if price reaches $200/bbl). After that peak price, it is predicted that old cars will be taken out of service if regulators put that plan ahead of time. If this happens, the electric vehicle industry could see tremendous growth.

In the meantime, the aspects that made oil the fuel of choice for the last hundred plus years haven’t changed-it is a fantastic way of producing and transporting energy. As the developing world gets richer, they will buy cars and oil dependent products faster than the developed world can cut back on energy use. That trend won’t last forever, as Sheikh Ahmad Yamani said “The Stone Age did not end for lack of stone, and the oil age will end long before the world runs out of oil,” but it also won’t drastically change overnight.

The best alternative for liquid fuels is if we synthesize liquid transport fuels from other energy sources such as renewables. This requires much less infrastructure spending than an all-out switch to electric vehicles, and achieves the same environmental benefit. Using compressed natural gas or gas to liquid technology can play a major role in the future of fossil fuels.

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Posted from my blog with SteemPress : https://selfscroll.com/the-future-of-oil/

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