Proven world oil reserves are currently estimated at about 1500 billion barrels1. Current world oil consumption is approximately 33 billion barrels per year2. 1500 divided by 33 yields a result of around 45 years before proven oil reserves are depleted. The 45 year average consists of some countries with less than10 years of proven reserves and a few countries with over 100 years of proven reserves.
A woman in her thirties recently told me, “Why should I care if there is a world oil shortage crisis 100 years from now? I’ll be dead by then”. That is true. However, some of her grandchildren, and the grandchildren of many other of today’s young people, will likely still be alive then. The point is this. We have an obligation to be good citizens and concern ourselves with the well-being of the generations who will follow us.
One hundred years ago, most of the people of the world still traveled by horse or foot. The first airplane flight occurred at Kitty Hawk in 1903, and extensive automobile use sometime afterward. Since then we have begun consuming the earth’s oil at an alarming rate. The world is currently consuming over 90 million barrels of oil a day! However, there is a finite amount of oil that is left within the earth3. The question is not if the world will run out of oil, but rather when.
A reality we must face is that a world oil shortage crisis is likely to occur much sooner than 100 years from now anyway. Peak world oil production, which is the point of maximum production, is projected to occur by 20204. This is just six years from now! Whenever peak oil production does occur, it will not be because of reduced world oil demand, but rather because of faster depletion of existing oil sources than new oil supplies can be produced.
To be sure, some additional oil reserves will be found, but not fast enough to support future world oil demand. Developing countries such as China and India are certain to be increasing their demand for oil at the same time that industrialized nations continue to expand. As world oil demand increases, and available oil supplies decrease, prices may begin to start rising rapidly within the next ten years. Price increases are especially likely as declining conventional oil production, which is easy to recover, gets replaced with more difficult and expensive oil extraction methodology. Consequently, it is probable that a gallon of gasoline will cost over $5.00 per gallon within the next 10 years. As time passes, the pace of price increases will inevitably accelerate if nothing is done. With the supply of oil decreasing and the demand for oil increasing, oil companies will be in a position to realize extraordinary profitability in the near future.
The United States government needs to act immediately to first stabilize and then begin reducing its consumption rate of oil. Bold action is necessary. The first step in my energy policy would be to provide a seven cent per kilowatt-hour subsidy for renewable electric energy production. This action would tend to reduce the consumption of oil and other limited resources that are being used to produce electricity.
Renewable electric energy is energy produced by wind, water, the sun, and the earth (geothermal). Renewable energy is unlimited and clean. The use of renewable energy does not cause global warming like the burning of fossil fuels does. The subsidy would continue until about 25% of our electric energy use was renewable, and then the subsidy reevaluated. There would still be a need for coal and nuclear power plants in order to meet demand.
The second step in my energy policy would be to exempt sales of automobiles that average over 60 miles per gallon from corporate taxation. Such vehicles already exist as gas-electric hybrids. They could be mass produced if tax incentives were provided to manufacturers.
The third step in my energy policy would be to exempt sales of solar panels for buildings and homes, and other renewable energy equipment, from corporate income tax.
The forth step in my energy policy would be to provide grants to companies who agree to install natural gas pumps at gas stations. This action would promote the development and utilization of vehicles that run on natural gas. There is currently a substantial quantity of natural gas reserves that could be used as a cost effective substitute for oil.
Subsidies, tax breaks and grants to businesses are unpleasant but appropriate temporary measures for governments to periodically take in order to avoid potential economic and social upheaval.
Some of the benefits of my four step energy policy include the following:
- The future price of gasoline and other petroleum products would be relatively lower than they would have become.
- The utility industry would focus on expansion using clean, unlimited, renewable energy rather than consuming precious limited resources.
- Global warming caused by the burning of fossil fuels would be reduced.
- The approaching world oil shortage crisis might be averted or at least minimized.
1 — “OPEC: World proven crude oil reserves by country, 1960-2011” (http://www.opec.org/library/Annual%20Statistical%20Bullitan/interactive/current/FileZ/XL/T31.HTM). Opec.org.
2 — “The World Factbook (2013-2014)”, United States Central Intelligence Agency.
3 — Nuclear Energy and the Fossil Fuels, M.K. Hubbert, Presented before the Spring Meeting of the Southern District, American Petroleum Institute, Plaza Hotel, San Antonio, Texas March 7-8-9, 1956
4 — “The Future of Oil Supply”, Miller, R. G.; Sorrell, S. R. (2 December 2013)