Are we running out of oil?

It is often said that oil is the fuel of the world’s economy. What does that mean? It means that we turn to the price of oil as an indicator on how the world economy is doing. As we all know, oil prices have skyrocketed this year. And it looks like there’s more to come. Dur- ing the pandemic, oil production dropped considerably due to a significant downturn in economic activity, and as a result, the price of oil dropped dramatically. Oil producers had to adjust to the new production levels without putting pressure on reservoirs or capital. It goes without saying that storage capacity is also limited. With the uncertainty of how long the economic crash would last, oil production became a rising concern. Since then, oil prices have risen sharply to almost $100 per barrel following the strong economic recov- ery after lockdowns. Demand is increasing at a staggering rate, so much so that oil pro- ducers are struggling to catch up.

As the economy continues to grow, so will the oil demand. Concerns over oil supply are not new; in fact, there have been multiple occasions where projections from governments and researchers have brought up the possibility that we are running out of oil. But with oil prices on the rise, how will consumers react? Chances are, people will turn to a cheaper alternative. So the real question is, are we running out of oil? Or will oil price itself out of the market before we even run out?

Oil is one