Oil: A non-renewable resource
Oil is vital to world economies. For oil-exporting countries, the resulting revenues provide a valuable source of foreign exchange earnings.
Why is oil a vital resource?
For many countries in the industrialised world, industry, commerce and transport are driven by oil. Sharp increases in the price of oil in 1973, 1979 and 1990 were each followed by economic recession, highlighting the dependence of the industrialised world on oil. Oil underpins our quality of life: it provides petrol for the car and electricity for the home. Oil is also a key raw material. A vast range of products including medicines, pesticides, textiles and plastics are derived from the petrochemical industry.
Growing demand
The growing global demand for oil is demographically and technologically driven. Accelerating population increase, together with higher living standards and the economic growth in LEDCs, especially China, have significantly pushed up demand for oil. China is now the world’s third largest consumer of oil after the USA and Japan.
Lots of factors can influence demand. High oil prices can curtail demand as can energy and environmental policies, which can result in another source of energy being used. Money is being spent by some oil companies and car manufacturers on research into the development of hydrogen as an alternative source of energy. In April 2003, Iceland opened its first hydrogen filling station.
Can oil be sustainable?
Reducing our demand for oil to prolong the life of our reserves seems an obvious solution but the resulting measures are not always socially acceptable. For example, economic measures such as increasing the oil price can be effective in reducing consumption but are not popular with consumers. More acceptable is efficient use of oil through improved energy production technologies and energy conservation, a feature now used in building design.
Is there enough oil and where is it?
Source: World Energy Outlook 2006
The key issue is not matching supply and demand but the fact that oil is a nonrenewable resource. This raises two fundamental questions: how much oil is there globally and how long are reserves likely to last? One prediction is that without a major oil find, global oil production will go into decline within the next ten years. The table shows estimated known reserves, two-thirds of which lie in the Middle East – a politically unstable region. But oil futures are very much unknown: reserves may be boosted by the discovery of new resources and by more sophisticated oil recovery technology.
Developing new resources
Developing new resources is not only a means of meeting global demand but also of diversifying oil sources. A new area, the Kashagan in the Caspian Sea, will start production in 2008. This field will be the world’s second largest and will reduce dependence on Middle East supplies. There is much prospective drilling in sub-Saharan Africa and geological and seismic studies have indicated that there are probably reserves on the Nyuni island in south-eastern Tanzania. However, exploration and exploitation of new resources is a lengthy and costly process and such development should always be socially, economically and environmentally sustainable.
Source Alexander's Gas & Oil Connections (www.gasandoil.com)
Non-renewable resources
Resources of which there is a fixed supply, such as metal ores and fossil fuels, and which will eventually be exhausted.
Economic recession
A temporary slow-down in economic growth.
Arctic national wildlife reserve, Alaska
Drilling for oil: An environmental battle
Total Imports of Petroleum (Top 15 Countries) to the USA
(Thousand Barrels per Day)
| Country | Jun-07 | May-07 | YTD 2007 | Jun-06 | Jan-Jun 2006 |
|---|---|---|---|---|---|
| CANADA | 2,300 | 2,462 | 2,407 | 2,410 | 2,276 |
| SAUDI ARABIA | 1,534 | 1,614 | 1,427 | 1,445 | 1,453 |
| MEXICO | 1,520 | 1,617 | 1,604 | 1,590 | 1,785 |
| VENEZUELA | 1,318 | 1,520 | 1,353 | 1,348 | 1,482 |
| NIGERIA | 968 | 964 | 1,100 | 1,078 | 1,207 |
| ALGERIA | 709 | 744 | 723 | 721 | 552 |
| IRAQ | 573 | 341 | 458 | 477 | 533 |
| ANGOLA | 514 | 692 | 596 | 582 | 448 |
| UNITED KINGDOM | 345 | 390 | 304 | 313 | 272 |
| RUSSIA | 285 | 499 | 421 | 399 | 317 |
| KUWAIT | 263 | 168 | 190 | 202 | 160 |
| VIRGIN ISLANDS | 216 | 287 | 340 | 319 | 301 |
| NORWAY | 183 | 234 | 167 | 170 | 204 |
| LIBYA | 170 | 69 | 91 | 104 | 62 |
| ECUADOR | 168 | 216 | 204 | 199 | 285 |
Source: Energy Information Administration
http://www.eia.doe.gov/pub/oil_gas/petroleum/ data_publications/company_level_imports/current/import.html
The US is the world’s most extravagant user of oil, consuming one quarter of all oil produced. It is currently facing the most serious energy shortage since 1973 when the Middle East placed restrictions on oil exports to the US.
In Bush’s State of the Union speech at the beginning of 2007, he outlined plans to cut U.S. gasoline use 20% in the next 10 years through better mileage and the increased use of gasoline substitutes such as ethanol.
This would mean that the petroleum industry would have to blend 35 billion gallons of renewable and alternative fuels with gasoline by 2017. That would displace one-fourth of the gasoline Americans use.
It's a huge jump from the current mandate of 7.5 billion gallons in 2012. Most renewable fuel is ethanol, grain alcohol usually made from corn. However, the US is still continuing with opening up oil deposits in the Arctic...
Background to Alaskan oil
Currently 17% of US domestic output is from Alaska’s North Slope. A new field (Alpine), which started production in 2000, is expected to yield 429 million barrels (one barrel equals 36 gallons) over 20 years.
Support and opposition to Anwr development
The supporters (Federal government, oil companies, Alaskan state government and 75% of Alaska’s population)
America’s largest oil field, Prudhoe Bay – on west Alaska’s North Slope – started production in 1968 and has provided 20% of domestic production but is now in decline. The projected daily output from ANWR could be more than oil imports from Iraq. The development of ANWR would bring important socio-economic benefits not only to Alaska but also to the entire country.
The environmental impact of developing ANWR would be far less than in the development of Prudhoe Bay. Technology has greatly improved, providing greater protection to both the tundra and wildlife. Drilling is confined to winter months when the ground is frozen, and ice roads (instead of gravel roads) and ice drilling pads (man-made areas of ice), disappear when the snow cover melts. Other improvements include smaller and fewer drilling pads, which reduce waste and emissions. Strict legislation is now in place to ensure that developers protect vegetation, permafrost, freshwater habitats and wildlife.
The opponents (environmental groups)
Environmental groups are strongly opposed to the project on ecological grounds. They argue that efficient use of current oil supplies could save more oil than will be obtained from ANWR and that the amount of oil likely to be produced does not justify the environmental costs. Opponents point out that transporting equipment across the tundra and potential oil spills could disrupt the delicate balance of the fragile eco-system. There is also the fear that drilling could be extended offshore, where coastal waters rich in nutrients support mammals such as seals and whales.
Source: Policy Facts, US Dept of Energy: Arctic National Wildlife Refuge
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