Since the origin of human life on earth, humans have gone through decades to decades exploring and learning about energy and its various sources and how each one of these energies could be further transformed to another source or sources. This means that the world’s development is in no way achieved without energy being consumed as each system needs the right energy source to power it up for its daily assignments.
However, there are many types of energy but the one to do here with is a primary source from fossils (ancient remains of plants and animals older than 10000 years) usually referred to as petroleum or fossil fuels. This is the most important primary source of energy and the most important nowadays amongst all energy types. Fossil resources remain the more dominant in the mix of energies, as they appear to be the most economic and efficient energy sources for our daily uses. Heat energy which accounts for greater than half of our needs is mainly satisfied by oil or natural gas. It is important to note that transport which constitute a greater proportion to as high as one third of the development of the world is mainly achieved with the help of oil from fossil fuels while on the other hand, electricity is gotten from coal representing up to 15% of the final energy consumption.
With respect to the world’s current consumption, proven oil reserves can still satisfy our needs in the next 53 years, natural gas for 55. However, because new discoveries are made every moment and or every day, it goes along the way pushing back the often predicted, but yet to be seen, end of fossil fuels. It is more important to keep in mind that reserve is dependent on price. This therefore means, the higher the prices, the more profitable the resources when extracted and added to the global proven reserves.
The thing that puts me to my knees is hearing some media and writers saying “the end of oil is soon”. That is quite true about the end to the oil market but don’t expect it to end imminently. As earlier discussed above, with an estimated 53 to 55 years to satisfy the world, it isn’t a matter of days.
The story behind oil price
Reviewing on how the price of crude oil has evolved from the beginning, immediately after which Colonel Drake discovered the first oil well, a monopolistic entity established by John Rockefeller was used to set the prices of oil until 1911 where his pricing regime was dissolute into the Standard Oil Company.
Over a time, the Seven Sisters came into power controlling all the oil market making the prices of oil to become fairly stable. The 1973 and 1979 saw two big oil shocks as a result of some unpredicted geopolitical circumstances breaking about war, political unrest and revolution. As a result oil experts established a consensus that the main driving forces behind the oil prizing formation is the physical and financial forces. Adding to it, we have the current oil shock which is quite proving to balance itself.
Challenges in the oil upstream sector.
In only 5 years, investment costs in exploration and Production have risen by close to 60%. And 2015 should have seen a new rise in exploration and production investment of 5%. The purpose of the upstream sector of oil is to maximize the rental cost of oil in order to make a difference between the oil price and the technological cost. This cost must be carefully controlled to maintain the profitability of the business. Proudly speaking, the oil industry is highly framed and challenged by social responsibility issues as well as environmental factors. Environment is becoming the major topic in the energy world.
The real question to ask is “what does the future of oil hold”?
This is where we are aiming at. This can only be answered by the prices of oil. With a forecast that oil price will rise dramatically in the next 5 to 25 years, it suffices to say oil may be facing its model T turn. I don’t mean to say an imminent collapse to the demand for oil but rather the danger and fear of investing in the direct means of finding new oil reserves and thereby paving a way for investors to invest in the alternative sources instead. Also, with the plans of producing energy while minimizing global warning from industrial work to close to 20C, the International Agencies forecasted that, in order to bring the climate change of the world to 20C, it will require that the production of oil peak between now and 2020 to about 93 million barrels per day such that in the next 20 to 25 years it could be replaces by electrical energy, natural gas and biofuels. This has now become a doubt with the election of Donald Trump who considers climate change as a hoax.
With increasing exploration and production activities, it is seen that most of the easy to access oil reserves have already been discovered and with most of the remaining and prolific reserves requiring complex technology and expensive means of exploration with long payback periods like those in the oceans and Canadian sands, many investors fear to invest in this business hence putting the some media, report writers, and the world in the wrong about the end of oil.
Also, with the predicted rise in oil prices, it will of course lead to lesser demand of oil in the market. As more and more other sources of energy come into play as an alternative to fossil fuel consumers, they will thrive to the alternative source. In order to avoid this, as it’s usually said “Education is Power”, oil marketers will need to reduce the cost of production in order that production balances prices. With almost of the cheap oil already been produced, it suffices to say the prices of oil should rise as the current explorations are done in highly dangerous and very deep offshore locations which requires a lot of expenditures but not to the extent that it drives consumers mad.
Conclusively, with the more prolific reserves yet still undiscovered, don’t prepare its down drop as every energy source experiences an unpredicted turn. This is to say, as was predicted earlier that alternative source of energy will have to replace fossil fuels in the next 25 years, so could the alternative sources just get an unexpected U-turn just as we all expected a 5% rise in oil exploration and production in 2015 which really did not happen as it was predicted.
The future of energy will still be oil and gas and it is still really bright, the world just need something to cut it right and that maybe your stuffs.