Are We Set for an Oil Shortage?

After months of reports about an oil glut, a price crash and a production freeze, it’s now possible we will have an oil shortage in the near future. As soon as the end of the decade in fact, according to the International Energy Agency (IEA). How has this come about? And what will be the effect on the oil industry? Read on for all the latest on the potential shortage of oil.

Forecasting changes

Each year, the IEA publishes their World Energy Outlook. It attempts to forecast energy trends based on the latest data. In their latest edition, they have suggested that there could be a shortage of oil as soon as 2020. Why? It’s a direct result of the glut. Oil companies and big oil producing countries have failed to agree on production freezes, despite OPEC’s best attempts.

Consequently, we have an abundance of oil and despite a slowly growing demand, there is just too much oil and too much competition as a result. Prices have fallen as companies try to secure deals in the same countries with a demand for oil. Places like India, in particular, need a lot of oil because of their fast development. They haven’t yet turned to alternative energy sources like more developed countries. Though with president-elect Donald Trump set to reverse climate change reduction efforts, we could even see the US using more oil.

Facing the consequences

Of course, with the falling price, the prospect of new oil finds and more production has become less profitable, and therefore less appealing to big companies. There has been a sharp decrease in explorations and investment in new projects, simply because it isn’t worthwhile in the current economic climate.

The IEA suggests that in time this could lead to a shortage of oil. Whether this will cause prices to rise and explorations to begin again is unclear. This is the forecast of the IEA, who say the price rise will trigger yet more instability in the global oil market. The alternative? With many countries investing in renewable energy sources, it’s possible – in time – that this could fill the void left by the oil shortage. However, it remains an issue for developing countries who can’t afford the infrastructure needed for renewables.

Coping with instability

When shortages do occur, the scarcity can be made worse by issues with nitrogen. There are a number of problems caused by nitrogen compounds from crude oils – the poisoning of catalyst during the refining processes, degradation observed in fuels during storage and handling, and NOx emissions from fuel combustion. ‘Nitrogen Determination in the Times of Scarcity of Natural Resources’ looks at how these problems can be avoided.