How Long to Replace Oil?
Everyone’s heard about peak oil, that elusive point when production of oil begins its inevitable and irreversible decline. The problem with defining that elusive point comes from a few things.
First, because more than 75% of the world’s reserves are controlled by governments, accurate data on reserves is nearly impossible to get. Sovereign nations don’t want people to know exactly how much oil is or is not under their soil. Second, new discoveries keep adding reserves as production depletes known reserves. Third, new technologies make it possible to wring more oil out of new and existing reserves, usually at higher costs.
A new paper by two researchers at the University of California at Davis takes a different approach (abstract here).The authors, Nataliya Malyshkina and Deb Niemeier, have created what they call a “probabilistic theoretical approach based on market expectations reflected in prices of publicly traded securities to estimate the time horizon until the appearance of new technologies related to replacement of nonrenewable resources, for example, crude oil and oil products.” In other words (I think), based on investors’ appetite for oil company stocks, we can estimate how long it will take to come up with an alternative to the globe’s supply of oil.
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