Rising Price

Past the Peak of Oil?

  • Why it matters

    Why it matters

    Germany is a front-runner in the use of renewable energy sources and its commitment to e-mobility, which means it could be strongly effected by a renewed global boom in fracking.

  • Facts

    Facts

    • British oil company BP estimates that about 2.6 trillion barrels of crude oil can be produced with today’s technology – twice as much as the world will need until 2050.
    • After a sharp dip in 2014, the price of oil has recovered to $55 per barrel, making production attractive for fracking firms again.
    • The United States today produces nine million barrels of petroleum per day, and could increase its output by more than three and a half million by 2020.
  • Audio

    Audio

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Gas Burn Off at Oil Field in Saudi Arabia
A oil separation plant in Shaybah, Saudi Arabia burns off excess gas that cannot be sent to the refinery. Photo: Corbis/Getty Images

From the gas station attendant in Iowa City to Russian President Vladimir Putin: the daily price of oil is a common concern for billions of people all over the world.

Yet Spencer Dale, chief economist of British oil company BP, isn’t worried. Instead, the 50 year-old expert insists on viewing crude oil – perhaps today’s most scrutinized natural resource – in the context of larger cycles of 20 to 30 years.

And while he may not have a crystal ball, he does have his reasons, many of which center on a recent report compiled by BP on the future of the world’s energy resources. In it, the authors state that around 2.6 trillion barrels of petroleum could potentially be extracted using today’s technology.

“That’s enough to satisfy the entire global population until 2050 – twice over,” says Mr. Dale optimistically. In other words: there’s no petroleum shortage. Rather, the world is swimming in oil. And while the oil price bounced back from last year’s 12-year low to currently $55 per barrel, Mr. Dale said he doesn’t expect prices to rise much higher in the long term.

As a result, he concludes, many high-cost projects will take decades to return a profit, or will never be viable at all. Low-cost producers including various countries in the Middle East, Russia and even parts of the United States “are likely to produce more and more oil and push down prices to force producers with higher costs out of business,” the expert explained.

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