As we know oil is not a renewable source of energy, though there are ways of getting a continuous flow of renewable, synthetic oil, such as biofuels and biocrude. Yet those may depend on other limited resources such as arable land or waste oil output. In this sense, the term peak oil is used to define the day when commercial fuel oil output is exhausted to the point to which it can no longer effectively cater to market needs, leading to its terminal decline. Theoretically, when this happens, oil prices will start rising indefinitely, quickly reaching the point at which it won’t be cost-effective as a fuel any longer.

heating-oil-pricesThis event largely depends on human’s ability to find more oil deposits below the ground worldwide. Large portions of the Earth’s crust, most of which is below the ocean.

One of the major threats for increased oil consumption is the continuous Earth’s population growth, which multiplied by gross economic growth coefficient yields an accelerating gross purchase power growth. Not only there are more people on the planet, there is increase in oil consumption per capita.

Most peak oil estimations from 1970s suggested that the peak oil date will be during the first decade of this century. This estimation is already in the past, and the world still runs on oil. However, many people believed that the great oil price growth of 2003-2008 was in fact the sign that oil is running out and that these prices will never drop, but the price crash of 2014-onwards with increased output proves that we aren’t quite close to peak oil.

Many countries already peaked, some of them include OPEC members, but it doesn’t mean that they should instantly give up on oil production. Instead, they will rely on limited, but controlled oil output which would serve their economy for the next 20 to 30 years from now. Other countries are still finding new reserves, even at a rate which outweighs their extraction amount in barrels.  It’s hard to determine the amount of unconfirmed and still undetected reserves across the globe, but the latest low price trend clearly indicates a high confidence of investors that peak oil is not around the corner.

What can extend the “life expectancy of oil” is technological advancing. There are two frontlines which loosen the pressure on oil demand. First: high efficiency engines in motor vehicles, aircraft, ships and heating furnaces which are designed to deliver more kinetic or thermal energy for the same amount of oil. There are also many other ways scientists try to beat oil consumption: lighter and aerodynamically designed cars, smart thermostats for use in oil heated homes, and many other fuel-saving features in oil powered devices. Second: emergence of technologies which partially or completely substitute oil and the need for it: hybrid or fully electric cars, heat pumps, solar water heating and else. Investments in technologies which can replace oil are on the rise every year, but technology is not there yet to unearth something epochal to completely spare us from oil dependence, like nuclear fusion energy.