Crude oil still plays a huge role in our lives — as a fuel, in heating and in industry. But it's a finite resource. When will production peak? And what if supplies run dry?
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00:00In 1956, a geoscientist for Shell and professor at Stanford projected that global oil production
00:06would peak around the year 2000.
00:09This came as a huge shock at a time when oil was driving more and more of the economy.
00:14Some people thought it would mean a global financial crisis, and others, a full-on apocalypse.
00:19Since then, predictions about peak oil have popped up again and again.
00:23Supply problems were supposed to start in 2011, with effects noticeable by 2015.
00:28There was talk of high prices for food and fuel, supposed to impact agriculture and electricity.
00:34But none of this ever happened.
00:36The supply problems that everyone freaked out about never came.
00:40So what did happen?
00:41And should we be worried about running out of oil?
00:44First, looking at this question now is completely different from decades ago, because there
00:49have been huge changes in our lives.
00:51In the early 2000s, we weren't really thinking about life without fossil fuels.
00:56Electric vehicles were nearly unheard of, so an end of our oil supplies seemed like
01:00an existential crisis for the planet.
01:02With growing awareness of climate change, renewables have taken off, and the amount
01:06of them in the mix has grown hugely.
01:08It's now cheaper to generate electricity from solar and wind than from fossil fuels.
01:13There's also way more attention on electric vehicles.
01:1714% of new vehicles sold globally in 2022 were electric, compared to just 5% in 2020.
01:24In the United States and China, two huge polluters are making hefty investments into
01:28green technology.
01:29And something pretty special happened in 2023.
01:32When we're looking at renewables investment, which clearly has been growing more rapidly,
01:36and in 2022 met that from fossil fuel, and 2023 far exceeded it.
01:41Mike Coffin used to work for BP and now researches how markets align with climate policy.
01:45Clearly that gap is only set to widen.
01:48While not much would move without fossil fuels, and oil in particular, the future of renewables
01:52is looking brighter and brighter.
01:54And that has made the end of oil take on a whole new meaning.
01:56If you go back to say about 15 to 20 years back, there was a concern that oil supply
02:02is going to peak, we're going to run out of oil.
02:05Atul Arya is an engineer and Standard & Poor's chief energy strategist.
02:08Now the concern is somewhat different, which is that we're going to hit a peak or a plateau
02:13in demand.
02:14This is a really huge shift.
02:16In October 2023, the International Energy Agency published a report predicting the end
02:20of oil and other fossil fuels.
02:23Only this time, the end is a peak in demand, not supply.
02:26And it's predicted to come in 2030.
02:29High demand and low supply means a high price.
02:32Low demand and high supply means a low price.
02:36Oil executives around the world were up in arms over the report.
02:40Because less demand with the same amount of supply would mean falling prices for fossil
02:44fuels and less profit for the industry.
02:46This is a big deal, since demand for oil has been growing every year except 2020 when
02:50COVID hit.
02:52This wouldn't mean that we wouldn't use fossil fuels anymore, rather that it would
02:55become much harder to justify new fossil fuel projects, because our supply of fossil fuels
03:01is doing great.
03:02We're not running out of oil, and probably not going to run out of oil, based on the
03:06current reserves, we have about 40 years of oil.
03:10And that doesn't even count all the new planned projects.
03:13This is mostly thanks to a newish technology called hydraulic fracturing, or fracking.
03:17Fracking is a process that involves injecting a slushy of water and chemicals into rock,
03:22creating tons of tiny cracks.
03:23This allows oil and gas to escape and be collected at the surface.
03:27The wastewater is then often injected deep underground, which can contaminate the local
03:31environment and cause earthquakes.
03:34Fracking took off in the United States in the early 2000s, and the country now produces
03:37more oil per year than any other nation in the world.
03:40So much that it's affecting other countries.
03:42Like Saudi Arabia, or UAE, or Kuwait, and actually right now, because of so much oversupply
03:50in the market, they are producing a lot less than what they can produce.
03:55So on the one hand we might have an oversupply of oil, and on the other, plateauing demand.
03:59Also investors turning away from fossil fuels.
04:02But oil companies are used to expanding, and major oil producers like Shell, Exxon, and
04:07Total Energies are all still betting on rising demand.
04:10Data suggested that all companies, I think except maybe BP, were increasing their oil production.
04:16Faye Holder is the lead researcher on a report that investigated oil companies' communication and claims.
04:21Total Energies stated it was forecast to spend 25% of its capex for 2022 in renewables and
04:30electricity.
04:31But when you look at what that includes, it also includes some kind of gas-fired power.
04:36They may seem like they're shifting towards renewables, but they are actually still banking
04:40on a fossil fuel future.
04:43The business operations aren't changing particularly, or at the pace needed.
04:46They're also lobbying against policies that would force that change, or bring it about quicker.
04:51But at the same time, promoting this very public narrative that they are doing all they can.
04:55State-owned oil companies like Russian Rosneft and Saudi Aramco are also betting on future
05:00money from fossil fuels, even though projects approved now may never be profitable.
05:05New sites take years to build up infrastructure and to get ready for drilling.
05:08In financial terms, they might become stranded assets, something that was invested in but
05:13became obsolete.
05:14For some countries, 30 to 40% of the entire fiscal budget could be at risk as the transition
05:19unfolds or when oil prices fall.
05:21That's going to have a massive impact on the economies of these countries and crucially
05:24on living standards for those in these countries.
05:27And that impact could also hit individual citizens directly.
05:30Many pension funds around the world are invested in oil and gas.
05:33If these companies fail spectacularly, millions of people could be plunged into financial insecurity
05:38in their old age.
05:41So faced with the end of oil, it seems like investing in renewables is the smart financial
05:44decision.
05:45They're cheaper, and there's less risk of new projects becoming stranded and unprofitable
05:49in the future.
05:50So all of that is going to help us move away from oil, but it's not going to be overnight.
05:59Because according to all predictions, we're going to continue to need fossil fuels for
06:02a while.
06:03They're used as a backup power when wind and solar aren't running.
06:06And widespread nuclear isn't likely to come online in time.
06:10Transport and energy storage also need to improve for us to be able to equip them entirely.
06:15But the more investment goes in, the more renewables improve.
06:18And we desperately need that to keep existing on this planet.
06:21But we are on the way.
06:22It's no longer a question of if, but when.
06:25Instead of being concerned about an end to our oil supply, we should be worried about
06:28pumping too much of it.
06:30With falling demand and a world shifting to renewables, it's not a smart decision, either
06:34financially or for our life on this planet.