Consider EROEI (energy returned on energy invested). This is how much energy it takes to extract a barrel of oil from the ground, whether by pumping or by melting in the case of tar sands and shale. In the 1950s, EROEI was about 100 - the energy of a barrel of oil could extract about a hundred barrels. The Canadian tar sands have EROEI of about 3.5. They weren't profitable until oil became expensive enough to make it worthwhile.
Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably. Some of those "trillions of barrels" you talk about are in that camp. They don't count as reserves, because they're useless.
Meanwhile, oil is going to keep getting more and more expensive and difficult to extract. Offshore deep-water drilling, tar sands, stuff like that, it's incredibly hard and often environmentally dangerous/destructive. And renewables get cheaper and cheaper, as there's a lot more room for improvement in technology and manufacturing scale.
Eventually - and I don't think that point is far away - it will be impossible to produce fossil fuels cheaper than the cost of solar/wind.
> Eventually - and I don't think that point is far away - it will be impossible to produce fossil fuels cheaper than the cost of solar/wind.
I hope and believe that you're right. But I don't think it will be because the price of oil is going up, but because the price of alternatives is going down.
> Once EROEI dips below 1, price is negative. It becomes impossible to extract the oil profitably
EROEI is not a constant, it changes with technology too.
And we'll still need oil for plastic, so it's theoretically possible that we'll use alternative energy to heat the tar to extract the oil to use it in plastic.
But woe is us if we ever get to that state. We'll have burnt so much oil that we'll be well past the climate change tipping point.
I agree that for things like aircraft, there's unlikely to ever be an electrical substitute for the energy density of organic fuel. But that could be done entirely from renewables if needed.
This is not strictly true: First, non-fuel use accounts for 5-10% of oil use.
Second: As long as oil offers higher-density (fuel energy, thrust-to-weight, &c.) mobile power generation than alternatives, it can be profitable. Id est: if it's cheaper to extract and refine a barrel of oil (perhaps with renewables) than to produce the equivalent biofuel, the oil could be produced profitably.
Petroleum consumption will, can, and has proceeded well beyond EROEI 1:1 parity within such uses -- see Germany's WW2 Fischer-Tropsch process.
The correct measure here is total economic return.
Fuel synthesis is negative EROEI.
And since anything that's in petroleum can be synthesized from simple molecules like water and CO2, given enough energy...
Actually even 1 or 2 wouldn't make much sense. It was close to what people had in medieval times without oil (1.5 energy or something close, from animals, mills, fire, etc).
How this will happen is not very clear (to me)
And most of that is lubricants and plastics. I think we can all agree that reducing our use of plastics is generally a good thing overall - we might make the switch back to more easily recyclable materials, e.g. aluminum and glass, which, although energy intensive to recycle, are almost endlessly renewable.
Not sure what good substitutes for oil based lubricants would be.
Oil is refined into many different byproducts. Some of the byproducts are used in manufacturing, and other byproducts are used in energy generation.
I mean, there are various ways to define what that means, but oil is getting increasingly expensive to get, alternatives are getting better, we may soon not have much oil left worth getting.
and of course we can bicker about what soon means.
Agreed. That is obviously a factor increasing oil prices, and may certainly more than balance the 4 factors I listed.
> alternatives are getting better
central to my argument
> we may soon not have much oil left worth getting
Oh I certainly hope so. I'm saying that we can't rely on oil prices going up substantially to ensure this. We need to invest in alternative energy sources and consumers and use carbon taxes to ensure it.
Actually we are consistently running out of oil, it being a finite resource.
You could say it's "enough for another 100 or 200 years" as opposed to those who say it's only enough for less, but you can't make it like we have infinite oil.
We chanced upon a source of relatively cheap energy that was created in geological time and takes millions of years to create. We didn't chance into some infinite tap.
>Anything that costs more than that price isn't counted in reserves because it's uneconomical to extract.
Beyond some point it would be so uneconomical to extract as to be meaningless -- or as to slow down the economy considerable, if it isn't for alternative energy sources (which also have their own problems if attempted at anything compared to oil use scale -- including storage, bad EROEI minus the subsidies, hidden costs, and unpredictable output, despite the solar cheerleading).
Climate change is very real on the North Pole and as a consequence, the US, Norway, Denmark/Greenland, and Russia are gaining access to new oil and gas fields that used to be inaccessible and are now being exploited. Particularly Russia is pumping out a lot of gas in that region and I'm sure Alaska is also doing well. So, there is indeed plenty of oil. But it matters whether you can sell it at 30$ or 100$ a barrel.
Another thing worth highlighting is that synthesizing carbo hydrates (aka. oil) from air is a feasible but energy intensive process. I.e. once clean energy prices drop far enough, that might actually become more lucrative than getting real oil/gas from the ground. Also a great way to store excess energy and you can do it anywhere. Like e.g. next to the refineries or pumps, thus cutting out transport as a cost factor.
1. Economics predicts that the price of something will be the same as the price of its cheapest substitute. For a long time, fossil fuels were the substitute, keeping the price of renewables & nuclear down to unprofitable levels. However, renewables, storage and electric cars are all rapidly decreasing in cost, depressing their prices and the prices of their substitutes.
2. Carbon taxes or other similar schemes are looking more likely in the future. They shift the demand/supply curve, causing fewer barrels to be sold at higher prices, but the price doesn't go up enough to cover the full increase, leading to depressed prices before the tax.
3. Economics says that the price of a commodity is the same as the marginal cost of production. In other words, the highest cost producer of oil that meets current demand makes $0 in profit, all lower cost producers make >$0 profit. If demand is low, then that marginal cost is $10 Saudi oil. If demand is high, then that marginal cost is $100 Canadian oilsands oil. So if demand drops because of climate change mitigation and/or renewable substitution and/or electric vehicle substitution, there is supply of lower cost oil, meaning prices can drop.
4. We're not running out of oil, we never have been. As mentioned in #3, the price of oil is the marginal cost of production. Anything that costs more than that price isn't counted in reserves because it's uneconomical to extract. So by definition we always have almost no reserves and never will have.
There are trillions of barrels of oil in the Canadian and Venezuelan oil sands alone that aren't counted as reserves for this reason. We're less than 2 price doubling periods away from making this economical, keeping a fairly low ceiling on prices.
And of course technology marches on, continually decreasing the price of extracting that oil...