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Global oil risks in the early 21st century

Author

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  • Fantazzini, Dean
  • Hook, Mikael
  • Angelantoni, André

Abstract

The Deepwater Horizon incident demonstrated that most of the oil left is deep offshore or in other difficult to reach locations. Moreover, obtaining the oil remaining in currently producing reservoirs requires additional equipment and technology that comes at a higher price in both capital and energy. In this regard, the physical limitations on producing ever-increasing quantities of oil are highlighted as well as the possibility of the peak of production occurring this decade. The economics of oil supply and demand are also briefly discussed showing why the available supply is basically fixed in the short to medium term. Also, an alarm bell for economic recessions is shown to be when energy takes a disproportionate amount of total consumer expenditures. In this context, risk mitigation practices in government and business are called for. As for the former, early education of the citizenry of the risk of economic contraction is a prudent policy to minimize potential future social discord. As for the latter, all business operations should be examined with the aim of building in resilience and preparing for a scenario in which capital and energy are much more expensive than in the business-as-usual one.

Suggested Citation

  • Fantazzini, Dean & Hook, Mikael & Angelantoni, André, 2011. "Global oil risks in the early 21st century," MPRA Paper 33825, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:33825
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    Cited by:

    1. Cho, Seong-Hoon & Bowker, J.M. & English, Donald B.K. & Roberts, Roland K. & Kim, Taeyoung, 2014. "Effects of travel cost and participation in recreational activities on national forest visits," Forest Policy and Economics, Elsevier, vol. 40(C), pages 21-30.
    2. Wang, Jianliang & Feng, Lianyong & Tverberg, Gail E., 2013. "An analysis of China's coal supply and its impact on China's future economic growth," Energy Policy, Elsevier, vol. 57(C), pages 542-551.
    3. Lutz, Christian & Lehr, Ulrike & Wiebe, Kirsten S., 2012. "Economic effects of peak oil," Energy Policy, Elsevier, vol. 48(C), pages 829-834.
    4. Tang, Xu & Zhang, Baosheng & Feng, Lianyong & Snowden, Simon & Höök, Mikael, 2012. "Net oil exports embodied in China's international trade: An input–output analysis," Energy, Elsevier, vol. 48(1), pages 464-471.
    5. repec:eee:eneeco:v:74:y:2018:i:c:p:721-732 is not listed on IDEAS
    6. Höök, Mikael & Tang, Xu, 2013. "Depletion of fossil fuels and anthropogenic climate change—A review," Energy Policy, Elsevier, vol. 52(C), pages 797-809.
    7. Höök, Mikael & Fantazzini, Dean & Angelantoni, André & Snowden, Simon, 2013. "Hydrocarbon liquefaction: viability as a peak oil mitigation strategy," MPRA Paper 46957, University Library of Munich, Germany.
    8. Ali Mirchi & Saeed Hadian & Kaveh Madani & Omid M. Rouhani & Azadeh M. Rouhani, 2012. " World Energy Balance Outlook and OPEC Production Capacity: Implications for Global Oil Security," Energies, MDPI, Open Access Journal, vol. 5(8), pages 1-26, July.
    9. Robert J. Brecha, 2013. "Ten Reasons to Take Peak Oil Seriously," Sustainability, MDPI, Open Access Journal, vol. 5(2), pages 1-31, February.
    10. Dean Fantazzini & Mario Maggi, 2014. "Proposed Coal Power Plants and Coal-To-Liquids Plants: Which Ones Survive and Why?," DEM Working Papers Series 082, University of Pavia, Department of Economics and Management.
    11. Ringsmuth, Andrew K. & Landsberg, Michael J. & Hankamer, Ben, 2016. "Can photosynthesis enable a global transition from fossil fuels to solar fuels, to mitigate climate change and fuel-supply limitations?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 62(C), pages 134-163.

    More about this item

    Keywords

    Peak oil; Economic risks; Energy transition risks; Government risks; Business risks;

    JEL classification:

    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q34 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Natural Resources and Domestic and International Conflicts
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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