According to the Energy Information Administration, the United States alone consumes about 19.63 million barrels of oil each day. Most of the oil we consume is used to make products such as gasoline, diesel, heating oil for homes, and jet fuel. Our rate of oil consumption continues to rise as if oil is a renewable resource, however, there is only a finite amount of oil left on this earth. A very conservative estimate by BP estimates that the earth only has about 53 years of oil left. One day, the worlds’ oil reserves will be depleted and many industries and economies in the United States and around the world are simply too dependent on oil.
The largest and most obvious industry that is not yet ready to move away from oil is the automobile industry. Although electric cars have become more popular and more reliable in recent years, the automobile market will continue to be dominated by gasoline powered vehicles. Last year, 82% of cars sold were gasoline powered; the Energy Department predicts by 2040, that number will only decrease to 78%. One solution to this problem is electric cars, however they have short driving ranges and they have yet to prove their long term reliability. Another solution is to convert from internal combustion engines to compressed natural gas engines. The main barrier standing in the way of making natural gas engines more popular among consumers is the lack of infrastructure necessary for natural gas powered automobiles. The biggest challenge of owning a natural gas car is finding a place to fill it up. We are caught in a paradox: automobile manufactures will not produce more natural gas cars until there are more compatible gas stations, on the other hand, natural gas companies will not invest in gas stations until there are more natural gas cars on the road. Although running out of oil is not an imminent threat to the automobile industry, it is easier to make a gradual conversion over time, rather than scrambling to make rapid change at the last minute.
Another issue concerning the world’s diminishing oil supply is how many economies are dependent on oil. Dubai is a perfect case study for an economy that is to dependent on oil. During its peak production in the 1990’s, oil production accounted for half of Dubai’s GDP. Today, Dubai’s oil production still makes up a large percentage of its GDP. Another issue for Dubai is that they consume more oil than they are able to produce, which forces them to import oil to make up that difference. This may not seem very eye-opening or shocking until you realize that Dubai’s oil reserves are projected to be depleted within twenty years. Dubai has very short amount of time lose their oil dependence before their entire economy is reduced to shambles. Oil dependent economies are not exclusively existent oversees. Houston, Texas is another example of how an oil based economy can be very disruptive and risky. Houston’s economy is largely dependent on oil; when oil prices fell last year, the workers in the oil industry felt the brunt of it. About 50,000 people lost their jobs during the oil bust. However during the oil boom, about 100,000 workers were hired in the oil industry. In order for economies such as Houston’s and Dubai’s to stay afloat with diminishing oil reserves, it is important they diversify and move away from a total dependence on oil.
Like any other natural resource, oil is not going to last forever, so it is imperative that industries and economies that are dependent on oil make changes so they will not be hung out to dry once a real oil shortage strikes.