Limited supply and low oil demand will increase the global oil production. Also, people and governments worldwide are increasingly adopting oil alternatives, as they are cheap and environmentally-friendly.
According to Peter Davies, Special Economic Advisor at British Petroleum (BP), one of the largest energy companies in the world, the production of oil might increase in coming years because of lack of demand for petroleum worldwide and not because of check on supply, as reported by Reuters.
According to BP, the proven oil reserves of the world still stand at 1.2 Trillion barrels, which can keep the current level of oil production for next 40 years (2008-2048). However, slump in demand for oil and decreasing supply is adding to the total oil reserves.
Burgeoning oil prices will be the chief cause for fall in global oil demand in the years to come. The oil prices have already touched the peak price of $100 per barrel in the beginning of January 2008. Besides, climate policies will also contribute to low global oil consumption as environmentalist worldwide are emphasizing on reducing the greenhouse gas emissions. These efforts are and will force consumers to look for alternatives of oil.
People have already started focusing on alternative sources of energy like wind energy, solar energy and biological fuels. Biological fuels have become the focus of attention now-a-days because they cause less pollution than oil. Moreover, these alternatives do not burn hole in the pockets of consumers.
According to the industry experts, another reason for decline in the global oil supply is the lack of investment in oil rich nations. Higher duty regimes are driving investors away and lack of investment is hampering oil production growth. The world will have to face tough challenge because of lack of supply and many countries around the world are passing through a transition phase of development, so they need oil (fuel) to build industries and automobile sector.
According to a Research Analyst at RNCOS, “The global oil production is swelling due to lack of demand and low supply. The environmental and economic policies are boosting the usage of alternatives of oil such as solar energy, wind energy, and other renewable resources, which produce less pollution and are relatively cheaper. Countries worldwide should intensify their efforts of using more and more alternatives as they will cut both pollution and prices.”
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