The oil pumped first was on land, near the surface, under pressure, light and sweet (meaning low sulfur content) and therefore easy to refine. The remaining oil is more likely to be off-shore, far from markets, in smaller fields and of lesser quality. It, therefore, takes ever more money and energy to extract, refine and transport. Under these conditions, the rate of production inevitably drops.When the cheap oil (land oil) content exhausted, oil companies will not go for the offshore oil resources if the processing and pumping require more money and efforts. Thus, even though oil resources are available even after the peak oil, it may not be economical to use, which force the oil companies to reduce or stop their production. Thus the oil prices will begin to increase. As there is no viable substitute for the oil at present, the only option available to the oil companies is to increase the price of the oil in order to control the demand“Oil currently accounts for about 43% of the worlds total fuel consumption and 95% of global energy used for transportation” (Anderson) It is unimaginable, a world without automobiles. Smooth and economical transportation of goods is essential for the growth of global economy. In order to transport materials to and fro, automobiles are essential irrespective of whether it is through road, rail, water or air. In other words, the supply and demand which controls the global economy will be affected drastically if the transportation means are interrupted or become expensive.Oil companies have already reported that they were unable to find out new oil resources which are economically feasible to process. “Of the 65 largest oil-producing countries in the world, up to 54 have passed their peak of production and are now in decline, including the USA in 1970, Indonesia in 1997, Australia in 2000, the UK in 1999, Norway in 2001, and Mexico in 2004” (Anderson) This is not a good sign for the global economy. The oil production remains constant for the last five years and it may continue like that for few more years.
Please type your essay title, choose your document type, enter your email and we send you essay samples