With the effects of the global Covid-19 pandemic affecting every aspect of life, the market for oil and gas has been heavily distorted. This change prompts the question, what would happen if the world ran out of oil?
Without oil, automobiles may become obsolete. City streets could turn into public community centers and green spaces filled with pedestrians and renewable crops. The use of bicycles could increase as people ride to school and work. The planet will begin to heal from over a century of human-caused climate change.
Oil is what runs our entire world, it powers our cars, it is the main ingredient in many medicines, and it is the foundation of many countries’ economies. It is a well-known fact that oil (and other fossil fuel) reserves are finite, yet humanity has not managed to wean ourselves off this dwindling resource. We all know that it will run out eventually, but how would it occur, and what will happen to humankind when it does?
How the Supply of Oil Works?
Oil companies cannot tap and drain the Earth’s entire supply of oil from a single well. There are tens of thousands of oil wells on the planet’s surface. Some are actively being used, some have already been drained, and some have yet to be tapped. Every oil well follows the same production bell curve, referred to as the Hubbert Curve, coined in 1956 by Shell geologist M. King Hubbert.
The Hubbert Curve shows that oil wells begin with a strong output that later stabilizes and then declines to nothing over the years. Hubbert also applied his curve to the state of global oil production. From the beginning, oil companies took advantage of the largest and most easily accessed oil fields first and then moved to smaller or more challenging to reach ones after they depleted the initial options.
Since technology advances alongside resource extraction, newer and more advanced technology makes previously inaccessible oil fields more worthwhile. This aggressive push to new areas is vital as oil companies have long since used up the accessible resources, yet our modern world demands a constant supply.
The overall curve that Hubbert proposed indicates that the global production of oil will rise, peak at a certain point, and fall off entirely. However, before oil production begins to fall off, we will reach a point referred to as “peak oil.” This point is where demand continues to rise while this non-renewable resource begins to drop off the other side of the curve.
Many nations of the world have already hit peak oil and are now declining. The United States production peaked in 1971 and has been declining since then. There is some debate about the state of global oil production, with some analysts saying that it peaked in 2005 and others stating that we have not reached that pinnacle as a species yet.
It is worth noting that crude oil reserves are unlikely to be technically exhausted, but that does not mean that the quality of what remains is usable by existing refinement methods. In most of the world’s reserves, the oil that remains underground tends to be of low quality, often referred to as “heavy” or “sour.”
This terminology means that it is probably not in a liquid form and more likely resembles a bitumen or tar-like substance that contains contaminants like sulfur in high amounts. While oil companies can refine this substandard form of oil, it requires a tremendous amount of energy to remove the sulfur as it can be highly corrosive to steel. This higher energy cost increases the overall production cost, which translates downstream to more expensive products for the end-user.
There are also newer potential sources like shale oil, but these are less usable than the name would suggest. Technically, this is not oil; it contains a substance called kerogen, which is usually a solid material and must be heated to 500 degrees Celsius before it even begins to resemble traditional oil. Even at this point, it still requires additional processing to be usable, making it prohibitively expensive even to consider refinement.
So, while many entities claim that there is a vast supply of oil still left to be tapped by oil companies, it is only to encourage confidence in the oil market. The costs associated with refining shale oil and other low-quality materials are so prohibitively high that there is no serious commercial use of it to date. It is also doubtful that there ever will be.
Understanding Oil Dependency
It is essential to look closely at how we use oil across the globe and what aspects of life are affected. Let’s start by reviewing Texas, a state renowned for its economic dependency on oil. Oil and natural gas had a complete hold over the Texas economy since 1901 when the Powell Oil Field was discovered in Corsicana.
This discovery provided plentiful cheap gas, which, coupled with governments that benefitted from the oil industry’s wealth, encouraged automobile ownership and use in every household. This reliance on personal vehicles has, in turn, left Texas’ public transportation sector virtually nonexistent, with the notable exception of the highly liberal city of Austin.
If oil were to disappear, the primary industry of Texas would dry up completely. Also, the lack of public transport would prevent workers in any sector from traveling to their jobs, which would cripple every city in the state. The rippling effects of the disappearance of oil showcase how dependent the world is on traveling for work. It would hit places like Texas and other oil-dependent economies harder because of the dominating oil industry. Still, they would not be alone in that collapse.
While Texas is renowned for its reliance on the oil industry, it is still a part of the United States’ broader economy and would have some degree of support. There are many countries such as Venezuela, Algeria, and Nigeria, whose entire economies are built on the back of the oil industry and already fluctuate dramatically with the rise and fall of oil prices. The disappearance of their economies’ bedrock would devastate these places as they currently have no plans to deviate from fossil fuels.
Public Transit vs. Personal Transportation
It is nearly impossible to overstate the necessity of vehicular travel for work, especially in the United States. Only 5% of U.S. commuters use public transit to get to work across the entire country. New York City is a notable outlier in that more than 30% of workers get to their jobs via public transit while the next highest city is San Francisco at approximately 17%.
Even taking New York City as an exception to the rule, less than half of all the city workers take public transit compared to driving themselves. In a world without oil, every city would stop functioning as the necessary workers can’t get to their jobs. Retail stores would close, factories would shut down, construction work would never be completed, and office buildings would remain empty, which would cripple the entire city.
The dependency gets even further out of hand when one considers that cities need to import all of their food and that food is transported primarily by truck or train. The disappearance of oil would not only prevent metropolitan areas from having enough people to manage their daily functions, but they would starve without food being brought in daily.
If cities become uninhabitable for people due to the inability to supply them with food, we will see the opposite of the last century’s trend. People will be forced to move out of metropolitan areas and into rural zones where land for growing food will become the most valuable commodity. As a result of this migration, less populous regions will quickly become saturated with people requiring housing and infrastructure to build their new lives.
There will likely be a resurgence of industrial-era practices such as dedicated worker housing for businesses in this scenario. The lack of personal transportation, coupled with a significant reduction in mass transit, will mean that employees need to live as close to their place of work as possible. This forced housing relocation may separate families and introduce many social issues as people from all walks of life are suddenly thrust into a very different lifestyle than they lived previously.
The variety of work would also diminish significantly in a world without oil. Without the ability to manufacture as many petroleum-based items, coupled with the increased need for local goods and services, the vast majority of jobs would by necessity be based in farming or building commodities out of renewable resources.
How Globalization Would Be Affected
The world today operates on a global infrastructure, and that globalization exists because of the capability to transport goods and materials across vast distances. For example, many cellphones are manufactured in China, which receives the materials needed to construct these devices from various other countries. Without oil to transport every part of the supply chain, every country on the planet will suffer the loss of industry, single-handedly destroying the global economy.
This concept applies to almost every aspect of life, and one of the most important and easily overlooked ones is energy. Currently, crude oil makes up about 33% of global energy requirements as a direct source, coal is approximately 30%, and natural gas provides around 24%. When you consider that the latter two are transported primarily by train or trucks that run on gas distilled from oil, it becomes apparent that an energy crisis would be a byproduct of the disappearance of oil.
In his hypothetical scenario, the local environment will be the single most crucial aspect of life, and our geographical location would heavily determine the problems that affect us. For large countries with extreme differences in geography and climate, the people may have wildly varying needs from one side to the other.
While the energy grid would likely last for a little while in countries like the United States, it would only be able to survive until the existing supply of natural gas and coal was exhausted, leading to widespread blackouts and brownouts. As renewable energy sources in many parts of the world are only just now becoming more readily available, electricity on its own would become a luxury that only certain places could maintain.
For those living in extremely hot or cold climates, the problem escalates quickly as heating and cooling options for homes rapidly become difficult to manage without the power grid. The potential for self-sufficient energy production is there with options like solar panels, wind turbines, and rechargeable batteries. Still, it requires time to set up, and the efficacy of these measures is based heavily on location.
The energy grid is only the first problem, as a world without oil would also mean the loss of products constructed from petroleum that we depend on as a species. There is a massive list of essentials that would be unable to be manufactured, including virtually all plastics, medicines, electronics, toys, paints, and so many things we take for granted.
Merely putting food on the table becomes a massive undertaking in this oil-less world as well. Without the ability to transport fresh fruit and vegetables across the globe, most of us would grow our food out of necessity. Existing local farmers who supply food would only offer their products to those within their proximity as transportation and refrigeration of produce would become extremely difficult. This lack of food storage options would likely mean that meat would become significantly rarer and require salting to become the primary preservation method.
Without grocery stores stocking up on every conceivable item worldwide, we would need to have a significantly less variable diet. This lack of diversity would mean many more cereal grains and fruits and vegetables would require old-fashioned preservation methods like canning or pickling. The only option for food would be what can be grown locally in each individual’s climate. Also, virtually every family would need to grow their food to supplement nearby farmers’ supply.
Preparing for the Change
Most scenarios discussed at this point are based on the idea that oil’s disappearance would suddenly occur without warning. In reality, it will likely happen gradually with many warning signs along the way, which would give time for countries and businesses to adopt other methods for their energy and fuel needs.
One such adaptation is the potential to convert gasoline engines to natural gas as a quick solution to transportation issues. With hundreds of millions of vehicles in the United States alone, this would not be an easy conversion. Still, it could be a possibility if the process begins sooner rather than later.
This conversion has already happened in Pakistan, which has fully utilized natural gas as a default vehicle fuel. While this process took years of engine conversion shifts and educational campaigns to happen, more countries can follow suit by adapting to other less scarce fuel sources in the short term.
Swapping from one fossil fuel to another will only delay the inevitable as these reserves will empty eventually as well, but if the idea of energy conversion can happen once, it will open the doors to further development down the road. Suppose renewable biofuels can become the norm for vehicles to make the incredibly important supply chain immune to oil loss. In that case, it will protect the global economy that would otherwise be in danger when oil runs out.
Only recently has the development of renewable energy sources been explored by countries. The United Nations held talks in 2016 with the intent to bring countries together to commit to a timeline for the gradual conversion from fossil fuel-based societies to ones run primarily on green energy.
The host country of Morocco is currently leading the world in these efforts. They have been in the process of building a multi-phase solar complex in the desert city of Ouarzazate. This project is referred to as the Noor Solar Power Complex, and when at maximum capacity, the facility will have the ability to power one million homes. This number is a small fraction of the 35 million Moroccans who live in the country, but it is only the start of their project.
Morocco plans to power 52% of its electrical needs through renewable resources by 2030. Still, other countries will need to get on board with these renewable efforts if they intend to survive when oil becomes scarce and ultimately disappears. The steps that Morocco and other countries have taken may be small on their own, but they are attempting to lead by example. These changes cannot happen quickly, and they require these small actions across the globe to make meaningful change.
Climate Change and Denial
Very few energy companies are willing to admit the enormity of the world’s issues regarding climate change. With oil companies continuing to mine fossil fuels and push CO2 and other contaminants into the atmosphere, there seems to be little change in extraction methodology.
In recent years the various groups lobbying for fossil fuel extraction have continued to overstate the quantity and quality of oil that still awaits extraction. Fossil fuel and mining companies have continually been overvalued on the stock market because they base their worth on assets that they cannot extract without significant damage to the environment and growing costs to consumers.
With so many countries and businesses reliant entirely on oil and gas to survive, it is unrealistic to expect that change can happen overnight. For meaningful change to occur, there needs to be a gradual shift away from the heavy reliance on this product worldwide.
Many experts have stated that the goal should be to reduce oil dependency as a fuel source and instead focus on its use as a raw material. As mentioned previously, oil, and more specifically, petroleum, is used in manufacturing so many essential aspects of our modern life. Instead of preventing its usage entirely, it would be more beneficial to focus its use on things that do not have alternatives.
With the most obvious example being gasoline as fuel in cars, there already exist alternatives. With advances like the Tesla brand of vehicles, electric automobiles have grown in popularity in recent years. Biodiesel, which is made by turning vegetable oils into combustible fuel, has also existed for decades in research and proven forms.
The main reason these alternative forms of fuel for cars have not taken off is the immense pressure of the oil and gas market. This multi-billion-dollar industry has so much control over the countries that rely on it for their exports that the stranglehold held by these corporations limits meaningful change.
The Fragility of the Oil Market Today
With the effects of Covid-19 affecting everyone across the world, it has prompted lockdowns, closed factories, and prevented people from traveling at all. The result of these changes has reduced global demand for oil by about 29 million barrels a day from about 100 million a day just last year. The Organization of the Petroleum Exporting Countries (OPEC) and other producers have agreed to reduce production. However, it has left an enormous surplus of oil on the market with no buyers in sight.
While crude oil generally does not deteriorate, many finished products such as gasoline do. This expiration date makes them challenging to stockpile and inefficient to produce in quantities that exceed consumption. As fields continue to produce oil that refineries and markets have no storage space for, this has led to vast amounts of crude oil filling storage facilities.
The storage networks of the world were not designed to accommodate this level of stagnation. With a handful of exceptions, storage facilities are intended to be transitional only because people consume almost as quickly as businesses can get it out of the ground. Like retail networks and other business systems, these energy networks have been unable to respond to the sudden changes that Covid-19 has brought on the world.
Earlier this year, the price-per-square-foot to store a barrel of oil doubled in many parts of Europe and the United States. Many companies began creating “floating storage” by leasing empty oil tankers to hold their surplus. The cost of keeping this much product unused in a tanker’s hold is more than $350,000 per day while sitting at the dock.
The overall result of this change is that crude oil has become one of the most expensive commodities to own, as storing it costs more than the oil itself does. In some cases, buyers can demand payment in exchange for the cost of merely keeping the oil.
The effects of this market collapse have been felt especially strongly by countries like Saudi Arabia and Russia. They depend on oil and gas as a considerable part of their economies and the damage done reflects what might occur if the world were to lose its oil supply suddenly.
The fluctuations in the global oil and gas markets have shown the fragile nature of depending on this product so heavily over the last ten years. If variable demand for oil can wreak this much havoc on the countries that rely entirely upon it, the commodity’s disappearance would either collapse or completely change their entire way of life.
The oil and gas industry is held together by the few companies that dominate it and the perceived reliance that our world has on these products. While many aspects of modern life do not have alternatives for petroleum products, if enough countries and businesses can recognize the economic and environmental dangers that lingering on this market can cause, then a change can occur.
Conclusion
Though certain entities who make their profits off this industry will never acknowledge its truth, our global oil supply is dwindling. It is now more important than ever to research how we can slowly wean ourselves off this risky product. The fact of the matter is that we will likely never be capable of entirely removing oil and its byproducts from the list of necessities. Nevertheless, if we can work towards a less oil-dependent society, it will protect our future.
Oil as a product will not disappear overnight and will likely increase in price and environmental cost year by year. Countries that continue to rely exclusively on this industry as the core of their economy will continue to suffer the fluctuations that come with it. It becomes the individual’s responsibility to reduce our reliance on oil and petroleum products as best we can. If we as consumers aren’t as reliant on these corporations for our day-to-day life, the industry will reflect that.
Instead of asking, “what happens if we run out of oil,” the real question becomes, “what happens when we run out of oil?” Unless we take the time and energy to set up our lives with alternatives ahead of time, we are entirely at the mercy of the day that oil is too expensive or too damaging to acquire. If we let it get to that point, it might be too late already.