Crude oil is the lifeblood of modern economies and nations, but what would happen if this vital fuel source were to ever be exhausted?

Needless to say, it would be a pretty serious event. But is it a realistic scenario for the future?

Let's find out.

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What Will Happen If We Run Out of Oil and Petroleum?

If this ever happened, and our current logistical infrastructure had not responded in time, this would potentially be a very serious problem. The human race is a global civilization and is heavily reliant on a plentiful supply of crude oil.

Between 1965 and 2005, humanity has seen an increase in demand for crude oil by about two and a half times. We are using twice as much coal and three times more natural gas.

At present, crude oil constitutes around 33% of global energy needs. Coal and is around 30% and natural gas comes in third place at around 24%. That totals around 87% of human global energy needs.

As you can see, if these supplies were to be perturbed significantly, it would be a big shock to the system, to say the least.

Oil, in particular, is an interesting and unique substance. It has a high energy content and is readily refined into liquid fuels through distillation.

It's distillation products like petroleum and diesel, run practically every mode of transport around the world. Oil and other fossil fuels are also vital for the production of electricity.

We literally depend on them for pretty much everything. Food, materials, clothes, computers, mobile phones, pharmaceuticals, etc all either directly or indirectly require crude oil and other fossil fuels for parts of their production or transportation.

Other resources, like natural gas, are also important for making some fertilizers. Without that food production would directly be affected around the world.

Sticking with agriculture for a moment more, most of a farm's larger equipment and machinery, like tractors and combine harvesters, run on oil-fuel derivatives. Planes, trains, and automobiles are also essential to move foodstuffs around the world.

So, the loss of these resources would have a profound, and shattering effect on human civilization.

How Long Until the World Runs Out of Oil?

We are constantly bombarded with news about the world's oil running out in the next 5, 10 or 20 years, but is this actually true?

Technically speaking it is actually unlikely that we will ever 'run out' of oil. But this is not because there is an infinite supply of the black stuff buried around the world.

Oil, and all other fossil fuels are finite resources by their very nature, but as easier reservoirs of oil are exhausted other more complicated reservoirs become economically viable.

Deeper reservoirs and other more technically challenging ones, are more expensive to exploit but as long as there is a demand for oil they are worth going for. This is, in part, the reason for oil's average rising price over time.

According to British Petroleum's Statistical Review of World Energy, we should have enough to last until about 2070.

But it should be noted estimates of oil reserves volumes are notoriously difficult to calculate, not externally audited, or not entirely truthful.

It is also important to understand what is actually meant by an oil reserve too. The U.S.G.S defines an oil reserve as: -

"quantities of crude oil in discovered accumulations which can be legally, technically and economically extracted."

In this sense, oil reserves depend entirely on the discovery of new pools as well as the development and availability of technologies to exploit them. They must also be legal to extract.

This is partly the reason that despite oil extraction rates generally increasing over time, oil reserves have actually also been increasing over time.

But, and take it with a pinch of salt, according to BP's report, as of 2018, they believe we have around 50 years left at current consumption and production levels.

Fools Black Gold

Whilst it is, in reality, unlikely that crude oil reserves will ever be completely exhausted, that doesn't mean the quality of what remains is useable.

In most reserves around the world, what remains underground tends to be poorer quality. Most of it is termed "heavy" or "sour".

This means that it is not necessarily in a liquid form and tends to be more of a bitumen. It also contains high levels of contaminants like sulfur.

Sulfur can be highly corrosive to steel which is bad news for refineries. This "heavy" oil requires complex and energy-intensive processing to remove the sulfur, which increases the cost of production overall.

In essence, humanity has used up a lot of the "good stuff" from the glory days of the oil industry.

Other 'newer' potential sources like shale oil aren't that much better either. Despite the name, the term "shale oil" is somewhat misleading.

This is not oil at all, in the true sense. It contains a substance called "kerogen" which tends to be solid and needs to be heated to 500 degrees centigrade before further processing.

This is to convert it to a liquid form that ostensibly resembles traditional oil.

So although it is claimed there are “trillions of barrels” of oil under America, really this is only to encourage voters and investors. The actual Energy return on Energy Invested (EROEI) is so poor that there has been no serious commercial exploitation of oil shale to date, and probably there never will be.

How Can We Stop Running Out of Crude Oil and Petroleum?

In short by cutting our dependence on it. Whilst this might sound a little flippant it is likely to be a matter of our hand's being forced rather than a planned slow down in consumption globally.

People will only be willing to pay top dollar for something, like a barrel of oil, so long as it actually does some useful work. And, more critically, that work must be more cost-effective than using another energy source.

The price of oil is likely to be capped as the relative cost of oil substitutes becomes more viable over time. Whilst, as we have seen, oil reserves are unlikely to ever be completely emptied and deeper extraction methods and exploration for new reserves will become more expensive over time.

In this sense, as oil begins to become restrictively costly in the future, consumers will begin to shop around for alternatives. Or if no reliable or realistic alternative can be found, methods to use current resources more efficiently will be explored.

A nice analogy is as follows from an article by Macleans:-

"Think of our economy as a computer running calculations. Think of economic output as the number of calculations it completes. Now, imagine the computer runs on a finite resource and that, at current rates of consumption, you’ll run out of the resource to run your computer in 30 years. It sounds dire, but it might not be.

If technology does not improve, your choice will be simple: reduce the amount you run your computer to smooth resources over time, or use them up and then starve... Now, imagine the computer technology improves such that its calculating efficiency increases each year. "

It should, therefore, be more than possible to improve the way we extract energy from a dwindling resource over time. It might even be possible to extend oil use indefinitely if we can devise means of using it more efficiently.

And that is before we even begin to talk about improvements in capital and labor productivity. For example, even small increases in labor or capital productivity can lead to large increases in production per unit energy.

Or put another way, it is very likely we will decrease the amount of energy per unit produced by necessity as oil supplies 'dry up'. At least in theory.

Just what the future holds for oil, and fossil fuels is still up in the air but what is clear is that we need to start using these resources more efficiently to extend their viability as a fuel source beyond 2070. Or, of course, switch to other energy sources like nuclear or renewables.

Time, as they say, will tell.