What if… the oil runs out?

Duncan Clark asks how much oil is left and how we'd cope with fewer fossil fuels

Climate change has put our energy needs centre stage. But even if the planet wasn’t warming the future supply of fossil fuels, and especially oil, would be a political and economic hot potato.

Crude oil drives our global economy. Also known as petroleum, it helps to make the petrol, diesel and kerosene that power everything from cars, ships and planes to factory machines. Oil even generates a certain amount of electricity, though relatively little in the UK.

Natural gas, which is essentially the vapour version of oil, is just as significant. Gas provides more than a third of the UK’s electricity and most of our home heating. It’s also key in some industrial processes, such as the manufacture of synthetic fertilisers.

How much is left?

No one knows exactly how much oil remains underground. There are various unknowns – from the validity of estimates by oil-rich governments through to the scale of previously inaccessible reserves below the quickly disappearing ice of the Arctic.

But what’s clear is that oil will never totally run out. Instead, it will become harder and more expensive to reach as we use up large, accessible reserves and start relying on smaller, more remote ones.

This will make oil more expensive and at some point it will become uneconomic to extract. In other words, it will cost more to get the oil out of the ground than it will be worth.

Predicting “peak oil”

For many commentators, the beginning of the end of our petroleum-focused economy will be when global oil production reaches its peak. The figure has been on an upward slope since oil was first commercially extracted in the 19th century.

There is much disagreement about when this will happen. Some experts, such as the members of ASPO, believe the peak to be imminent. Others, including many governments and oil companies, place it comfortably in the future.

What’s not in dispute is the fact that for around 30 years the world has been pumping more oil than it’s been finding in new reserves. Clearly, that is not a sustainable situation.

Economic fall-out

Just as no one knows exactly how much oil remains, no one knows exactly what will happen once oil production starts to decline. A pessimistic prediction would be that energy prices will rocket and a global recession of unprecedented scale will ensue.

Some commentators foresee this recession taking place against a backdrop of renewed international tension, with superpowers America and China battling politically or even militarily for control of remaining reserves.

Alternatively, more upbeat analysts predict that oil will gradually become more expensive, driving much-needed investment – and creating jobs – in alternative fuels and energy efficiency.

Oil and climate change

Burning oil-based fuels is a significant cause of climate change, so it’s tempting to think that a decline in oil production would help solve global warming. That may be true, especially if economic activity as a whole slows down in the aftermath of the oil peak.

But it could go the other way, too – a poorer world may be less prepared to invest in clean energy solutions or energy efficiency measures. Moreover, the alternatives to regular oil might turn out to be even more polluting.

For example, synfuels made from coal, oil shale or tar sands can be substituted for regular oil, but they release large volumes on CO2 in use and production.

Even if synfuels don’t catch on, a fall in oil production could theoretically drive demand for more electricity – to power electric cars, for instance. If the world turns to coal for this electricity, then the impact on climate could be disastrous.

The big question

All told, no one knows exactly when oil production will start to decline or what will happen when it does. Clearly the days of the oil age are numbered, but it remains to be seen what age will follow.