Natural resources vs. Supply & Demand
Do we have enough natural resources to fulfil growing demand?
Diving into the question whether we have enough natural resources, we have to understand what natural resource is. Swafford describes it in a lecture as useful raw material that we can get from earth. These materials can not be made by humans, instead humans can modify them to fit our needs and demands. (Swafford n.d.)
As our objective is to better understand crude oil demand, hence we will limit our research for this purpose. Crude oil as a natural resource can be used in a large range of different areas for example: electricity, fuel for cars and airplanes or even plastic. This is also the reason for its high consumption.
To reach our objective and find an answer, we will divide the main question into two areas of interest. Firstly, we define the reason for crude oil demand and secondly, we will look at the possibilities fulfilling those demand taking into consideration legislative and technical side´s as well.
Why is the demand of oil increasing?
Between 2005 and 2030 energy needs was predicted to expand 55% and energy consumption to increase 50%. Oil, coal and gas are used for energy consumption, with oil being the dominant source of use. (Bitesize BBC.) What is it that makes this consumption increase faster, while providing reusable energy as well?
World population is increasing and estimation of world population for 2026 is 9.6 billion. Population growth can be mainly seen in developing countries, with Africa taking the lead. Growth in population and increase in the way of life (standard) is placing large demand in the consumption of energy. Currently developed countries use the large proportion of energy due to concentration of industries, car owners and high levels of home appliances. (Bitesize BBC.) United states, Chine and India are currently top three oil consumers in the world (EIA 2019).
Economic principle of supply and demand states that, price of a product is in direct relation to supply related to consumer demand. Changes in oil price effects can be seen worldwide, therefore this subject is well researched and kept highly important. Oil consumption is related to population and the state of development that country is in. However, the price of crude oil is affected by a variety of different areas such as: exchange rate, environmental factors (hurricanes that damage oil facilities), political factors and speculation. (Lane 2019.)
Oil demand will slow down in the coming years. Slowing down does not equal to zero growth, this is the main reason “peak oil” numbers are not to be found. According to EIA in 2020 oil consumption is expected to grow by 1.4 million BPD. These forecasts are of course often adjusted, recently analysts have predicted weakening economies, due to US/China trade war. (Geiger 2019; Gloystein & Varghese 2019.)
How can we fulfil demand in an environmentally conscious way?
In USA 70% of all oil consumed is by personal vehicles. Cars, trucks and vehicles that consume fuel for energy convert chemical energy of the fuel into mechanical energy that is then used to change speed, overcome aerodynamic drag and highway rolling loss. Improving the engine where the greatest loss occurs will directly impact the need for consumption of oil and reduce carbon dioxide emissions as well. Countries such as the united states have strict laws relating to engine performance, which translate into decrease in consumption. (Truman & Storvick 2016, 161-163.)
EIA predicts that 300 million electric vehicles will be on road by 2040, this will cut the demand of oil by 3.3 million bpd. Focusing on the efficiency of the fuel-based vehicles is according to EIA more important. Improvements made in the cars avoid 9 million bpd in 2040, which is almost three times as much as the benefit from electric vehicles. (Cooper 2018.)
Alternative energy is a term used for resource´s that can replace crude oil. Just to name a few, most sawed after alternative resources include solar energy, coal mine methane, geothermal energy, nuclear energy, natural gas and hydrogen fuel cell. Then we can divide them into two main categories non-renewable and renewable energy. Non-renewable energies are limited and will eventually run out, such as natural gas. Renewable energy sources on the other hand are virtually limitless for example solar energy, wind power and biodiesel. Their production cost is very high, hence development has been slow. (Cook 2017.)
Too expensive to be eco-friendly. The amount of solar power that reaches earth has the ability to provide trillions of watts of power. Currently the amount used for energy by solar is less than one percent. The problem with solar is that it is just too expensive, due to technical issues such as inefficient solar panel cell´s, where the energy is converted. Building nuclear station can cost more than twice as much as building a coal-plant. Hence building them is slow or they are delayed completely like Olkiluoto facility in Finland. These nuclear stations have their own dangers as well, as an example the station that was damaged, due to earthquake in Japan. (Greenemeier 2010.)
We do have enough natural resources to fulfil growing demand of energy consumption like natural gas however, we do not have enough crude oil to fulfil the demand. The demand is increasing due to growth in population, consumption by the industries, improvement in quality of life and increase in the number of vehicles.
Oil consumption will be according to EIA most effectively decreased by improving the efficiency of use. Better engines translate into decrease in consumption.
Numerous types of resources that have the ability to replace crude oil are available. Alternative resources like solar energy and wind power are to be development in cost effective way for them to be used widely.
Cook, V. 08 January 2017. Alternative Energy Sources - Crude Oil Substitutes. Tripodblog. URL: http://vanrcook.tripod.com/alternative_energy_sources.htm. Accessed: 16.09.2019.
Cooper, A. 2018. Global oil demand under growing threat from electric cars, cleaner fuel. Reuters. URL: https://www.reuters.com/article/us-oil-iea-demand/global-oil-demand-under-growing-threat-from-electric-cars-cleaner-fuel-idUSKCN1NI005. Accessed: 16.09.2019.
Energy Information Administration 2019. Independent statics and analysis. US government. URL: https://www.eia.gov/tools/faqs/faq.php?id=709&t=6. Accessed: 16.09.2019.
Geiger, J. 2019. How Much Crude Oil Has The World Really Consumed? Oilprice.com. URL: https://oilprice.com/Energy/Crude-Oil/How-Much-Crude-Oil-Has-The-World-Really-Consumed.html. Accessed: 16.09.2019.
Gloystein, H. & Varghese, A. 2019. Oil demand growth grinding to lowest in years as global economy stalls. Reuters. Singapore & Houston. URL: https://www.reuters.com/article/us-global-oil-demand/oil-demand-growth-grinding-to-lowest-in-years-as-global-economy-stalls-idUSKCN1TD0YI. Accessed: 16.09.2019.
Greenemeier, L. 28 September 2010. Crude Alternatives: Energy Industry Heavyweights Debate Fuels of the Future. Scientific American. URL: https://www.scientificamerican.com/article/fuels-of-the-future/. Accessed: 16.09.2019.
Lane, R. 2019. Factors Affecting Demand & Supply of Oil Prices. Market research. Bizfluent. URL: https://bizfluent.com/info-8621442-factors-demand-supply-oil-prices.html. Accessed: 16.09.2019.
Reasons for increase in demand for energy n.d. BBC. URL: https://www.bbc.co.uk/bitesize/guides/zpmmmp3/revision/1. Accessed: 16.09.2019.
Suppes, G. & Storvick, T. 2016. Sustainable Power Technologies and Infrastructure. Science direct. The University of Missouri Columbia, Columbia, Missouri. pp 161-163. URL: https://www.sciencedirect.com/science/article/pii/B9780128039090000051. Accessed: 16.09.2019.
Swafford, A. n.d. What Are Natural Resources? - Definition & Types. study.com. URL:
https://study.com/academy/lesson/what-are-natural-resources-definition-lesson-quiz.html. Accessed: 16.09.2019.