The End of the Oil Age?
I have written before about the fact that even though 30 percent of known oil reserves will have to stay in the ground if we are to curb climate change to within acceptable limits, eye-watering sums of money are still being spent on exploration for new reserves.
4th September 2015 | Peter Rolton: Chairman, Rolton Group
Unsurprisingly, environmentally focused appeals make very little impact on the global appetite to exploit fossil fuels; what does make a difference, however, is money.
Thanks to the advent of large-scale shale exploration, the USA has boosted its oil production by almost 90 percent since 2008. With members of the Organisation of Petroleum Exporting Countries (OPEC) showing no signs of slowing operations to maintain global balance, and in fact countries such as Saudi Arabia going hell for leather on production in an attempt to bankrupt their competitors, additional oil supplies are flooding the market and the cost per barrel has plummeted to below $50.
This influx of supply is juxtaposed by a slowdown in demand; global consumption of oil is predicted to rise by under 1 percent in 2015, creating a huge imbalance that benefits consumers but creates problems for the fossil fuel industry. With high exploration and production costs stacking up against depleting profit margins, we are already seeing rigs close around the world as firms tighten their belts in an attempt to cut costs.
OPEC nations may be battling it out to gain majority share of the market, but by the time the eventual victor is named the world may have moved on. Countries everywhere are keen to lift their reliance upon these few suppliers of fossil fuels; two thirds of the world’s proven oil reserves sit under Saudi Arabia and its neighbours, so for many decades they have held the cards when it comes to how much we pay for our power. With accelerating technological innovation, however, we are at the start of a great democratisation of energy that will see traditional fuels outmoded in favour of locally available, cleaner sources.
Diversification is coming in many forms, from the more established solar and wind to the development of hydrogen fuel cells, and as we continue to find better ways of providing energy it follows that there will no longer be any need to rely on what will be comparatively expensive and dirty sources from elsewhere in the world. It has been said that ‘the Stone Age did not end for lack of stone, and the Oil Age will end long before the world runs out of oil’, and the truth of that statement has never been more apparent.