December 28, 2013
Abundant supplies of cheap natural liquid fuels form the foundation of modern industrial economies, and at present the vast majority of these fuels are obtained from so-called ‘conventional’ oil. Oil accounts for more than one third of global primary energy supply and more than 95% of transport energy use—a critically important sector where there are no easy substitutes.
Concerns about “peak oil” have recurred repeatedly since the resource was first developed, but public concern has recently diminished, partly as a result of shale oil production in the United States. Yet, despite these developments and globally rising reserves, oil prices have almost doubled since 2010 and have tripled in a decade. Oil remains critically important, adequate substitutes have yet to be found and concerns about oil depletion persist.
So the age of cheap oil is long gone and that we are entering a new and very different phase.in which global oil production is declining at about 4.1% per year, despite new discoveries and increasing reliance on unconventional oil and gas. These new fields have not actually increased production by very much, due to the decline of older fields. Conventional oil resources are at an advanced stage of depletion and that liquid fuels will become more expensive and increasingly scarce. The final peak is going to be decided by the price - how much can we afford to pay--and a shortage of oil will affect everything in the economy.