A major review of the world’s remaining oil reserves has attracted criticism from many scientists who warn that oil supplies will run our sooner than governments and oil companies are prepared to admit.

Published yesterday, BP’s Statistical Review of World Energy apparently shows that there are enough ‘proven’ oil reserves to last another 40 years at current consumption rates. This figure is higher than was previously predicted. However, scientists led by the Oil Depletion Analysis Centre in London have said that oil production will probably peak in the next four years before entering a decline - a decline that will have massive consequences for the global economy.

The peak theory is a theory that states our consumption of oil will catch then outstrip the discovery of new oil reserves and we will then begin to deplete known oil reserves.

It has been said that the peak of regular oil has already come and gone. Regular oil is cheap and easy to extract and it reached it’s peak in 2005. This leaves heavy oil which is harder to extract and is based in places such as deep sea reserves, polar regions and liquid taken from gas. Scientists have estimated that this peak might come as soon as 2011.

Unsurprisingly, BP has dismissed the ‘peak oil’ arguments and claims that the data in it’s review is valid and accurate.

However, the fact remains that the gap between supply and demand has closed at a fast rate in the past few years - to the extent that there is almost no gap between supply and demand today. Should demand start to outstrip supply, the price of oil will probably start to soar and this could push the global economy towards a huge recession.

A worrying factor is that our reliance on oil is growing with demand surging. China and India have experienced huge growth in recent years, upping the demand for oil significantly. BP’s review shows that the world demand for oil has grown faster in the last 5 years that in the second half of the 1990s; The International Energy Agency have said that if they use conservative estimates, they expect that oil demand will rise to 113 million barrels a day by 2030.

Oil isn’t just about petrol and fuel - it is used in many industries. Even a blip in oil production can have huge repercussions on price - in the 1970s, there was an oil supply reduction of just 5% yet prices went up over 400%.
Pesticides and fertilisers are based on oil;
Plastics in computer parts, clothing, carpets and phones are all oil-based;
The production of a single car is said to need at least 20 barrels of oil;
Even renewable energy is not immune to the influence of oil - most renewable energy equipment is made from oil based substances;
Even things such as cosmetics, ink and painkillers rely on oil in the manufacturing process.

So if oil runs out, what can we use instead?
Coal: Analysts say there is enough coal to power the world for at least 150 years. But with the backlash against fossil fuels thanks to their perceived role in global warming and climate change, many will not be happy to use this as an alternative.
Natural Gas: Natural gas reserves are predicted to outlast oil reserves by about 20 years. Natural gas is cleaner than oil but it is still a fossil fuel and again, is not an option welcomed by many. It is also expensive to extract and transport as it must be liquefied.
Hydrogen Fuel Cells: This is a renewable, clean energy source. It combines hydrogen and oxygen to produce electricity, water and heat. However, there isn’t enough hydrogen freely available to use as a regular supply and making hydrogen cleanly is incredibly expensive.
Biofuels: Ethanol can be made from corn and maize and this is becoming a popular alternative to oil. However, it may not be such a good option because it requires a lot of space to grow and it also pushes out other crops.
Renewable Energy: Hydroelectric, solar and wind power are all examples of renewable energy. The major downside of renewable energy sources is the amount of energy they produce. The amounts of energy they produce also varies a lot and is fairly unpredictable.
Nuclear Power: Uranium is running short however new reactors do not need as much uranium and scientists are investigating the possibility of using thorium instead of uranium. The major downside of nuclear power is the potential widespread, long-term devastation if a disaster occurred at a nuclear power plant, and the risk the terrorists may get their hands on radioactive materials.

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