Global Warming Prediction Project
Global Warming Prediction Project
Prediction Scenarios: World oil price, consumption, production (2)
10.09.2012
This is an update of the crude oil price projections posted in November 2010. The data for this updated model are taken from the BP Statistical Review of World Energy 2011. The underlying models implemented in Excel are available in this package free. You can run different scenarios yourself and see how the oil price responds given different input conditions.
We would like to briefly show just two possible scenarios here, exemplarily.
1.Status-quo
If world oil consumption and production do not vary much from their development in the past 10 years, the yearly average oil price would continiously rise from its current price level up to over $180 per barrel in the year 2025 as shown in figure 1. Note also that beginning from 2005 the oil production has always been below oil consumption. This is important, because oil companies do a lot to discover new reserves and to rise production from oil sands, shale oil, and in the deep water. Still, following the published official numbers in the statistical review, this has not been enough to keep production and consumption balanced, at least. Always assuming that there are no other reasons for this fact. Extracting oil from tar sands or from the deep water is very cost intensive, and to do it economically reasonable a high oil price level is required.
Fig. 1: Status-quo prediction of oil price, consumption, and production.
2.Balanced growth rates
Given that the growth rate of oil production has been lower than the growth rate of oil consumption for several years in a row, assuming balanced growth rates for the coming 15 years would be an optimistic and ambitious scenario, already. Even in this case, however, the absolute oil production numbers would not catch up with world oil demand and, consequently, oil prices would rise (fig. 2). The only difference to the first scenario is that the price growth would expectedly be more moderate. This is of course only true if no serious international conflict comes up. The basic problem that demand is higher than production could not be solved in this way. It clearly would need higher growth rates of oil production over consumption to return to a positive balance. It is open if and to which extent this would really happen.
Fig. 2: Scenario for balanced growth rates of oil production and consumption
Take a look at the numbers published by BP and at this simulation. Apparently, oil is running short. No matter of whether there are indeed hard facts for it or if it is rather the result of some „special interests“ of certain market players, from a viewpoint of billions of consumers of oil, be it energy or every day consumer goods, this is not a good outlook. Are there really no alternatives, perspectively?