WEBVTT

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In 1956,

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a geoscientist for Shell and professor at Stanford

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projected that global oil production

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would peak around the year 2000.

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This came as a huge shock at a time

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when oil was driving

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more and more of the economy.

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Some people thought

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it would mean a global financial crisis,

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and others, a full-on apocalypse.

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Since then,

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predictions about peak oil

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have popped up again and again.

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Supply problems were supposed to start in 2011,

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with effects noticeable by 2015.

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There was talk of high prices for food and fuel,

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supposed to impact agriculture and electricity.

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But none of this ever happened.

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The supply problems

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that everyone freaked out about never came.

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So what did happen?

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And should we be worried about running out of oil?

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First, looking at this question now

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is completely different from decades ago,

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because there have been huge changes in our lives.

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In the early 2000s,

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we weren't really thinking about life

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without fossil fuels.

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Electric vehicles were nearly unheard of.

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So an end of our oil supplies seemed

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like an existential crisis for the planet.

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With growing awareness of climate change,

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renewables have taken off,

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and the amount of them

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in the mix has grown hugely.

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It's now cheaper to generate electricity

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from solar and wind

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than from fossil fuels.

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There's also way more attention on electric vehicles -

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14% of new vehicles sold globally in 2022

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were electric,

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compared to just 5% in 2020.

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Even the United States and China, two huge polluters,

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are making hefty investments into green technology.

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And something pretty special happened in 2023.

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"We're looking at renewables investment,

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which clearly has been growing rapidly,

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in 2022 to match that from fossil fuels

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and in 2023 far exceeded it."

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Mike Coffin used to work for BP

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and now researches

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how markets align with climate policy.

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"And clearly that gap is only set to widen."

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While not much would move without fossil fuels,

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and oil in particular,

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the future of renewables

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is looking brighter and brighter.

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And that has made 'the end of oil' take

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on a whole new meaning.

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"If you go back to, say, about 15 to 20 years back,

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there was a concern that the oil supply is going to peak.

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We're going to run out of oil."

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Atul Arya is an engineer

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and Standard & Poor's Chief Energy Strategist.

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"Now, the concern is somewhat different,

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which is that we're going to hit a peak

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or a plateau in demand."

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This is a really huge shift.

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In October 2023,

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the International Energy Agency

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published a report predicting the end of oil

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and other fossil fuels.

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Only this time,

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the end is a peak in demand, not supply.

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And it is predicted to come in 2030.

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High demand and low supply means a high price.

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Low demand and high supply means a low price.

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Oil executives around the world

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were up in arms over the report.

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Because less demand

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with the same amount of supply

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would mean falling prices for fossil fuels,

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and less profit for the industry.

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This is a big deal,

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since demand for oil has been growing every year

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except 2020, when COVID hit.

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This wouldn't mean

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that we won't use fossil fuels anymore,

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rather that it would become much harder

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to justify new fossil fuel projects.

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Because our supply of fossil fuels is doing great.

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"We're not running out of oil

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and probably not going to run out of oil.

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Based on the current reserves,

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we have about 40 years of oil."

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And that doesn't even count

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all the new planned projects.

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This is mostly thanks to a newish technology

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called hydraulic fracturing or fracking.

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Fracking is a process

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that involves injecting a slushie of water

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and chemicals into rock,

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creating tons of tiny cracks.

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This allows oil and gas

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to escape and be collected at the surface.

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The wastewater is then often injected

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deep underground,

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which can contaminate the local environment

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and cause earthquakes.

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Fracking took off in the United States

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in the early 2000s,

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and the country now produces more oil per year

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than any other nation in the world.

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So much that it's affecting other countries.

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"Take Saudi Arabia or UAE or Kuwait.

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And actually right now,

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because of so much oversupply in the market,

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they are producing a lot less

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than what they can produce."

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So on the one hand

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we might have an oversupply of oil,

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And on the other, plateauing demand.

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Also, investors turning away from fossil fuels.

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But oil companies are used to expanding,

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And major oil producers

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like Shell, Exxon and Total energies

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are all still betting on rising demand.

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"The data suggested that all companies,

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except maybe BP,

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were increasing oil production."

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Faye Holder is the lead researcher on a report

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that investigated oil companies'

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communication and claims.

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"Total Energies stated it was forecast

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to spend 25% of its CapEx for 2022

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in renewables, in electricity.

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But when you look at what that includes,

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it also includes some kind of gas fired power."

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They may seem

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like they're shifting towards renewables,

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but they are actually still banking on

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a fossil fuel future.

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"The business operations aren't changing

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particularly or at the pace needed.

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They're also lobbying against policies

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that would force that change

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or bring it about quicker.

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But at the same time,

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promoting this very public narrative

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that they are doing all they can."

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State-owned oil companies

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like Russian Rosneft and Saudi Aramco

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are also betting on future money

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from fossil fuels,

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even though projects approved now

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may never be profitable.

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New sites take years to build up infrastructure

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and to get ready for drilling.

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In financial terms,

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they might become stranded assets -

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something that was invested in

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but became obsolete.

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"For some countries,

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30 to 40% of entire fiscal budget could be at risk

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as the transition unfolds or an oil prices fall.

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So that's going to have a massive impact

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on the economies of these countries and

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crucially on living standards of those

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in these countries."

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And that impact

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could also hit individual citizens directly.

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Many pension funds around the world

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are invested in oil and gas.

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If these companies fail spectacularly,

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millions of people could be plunged

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into financial insecurity in their old age.

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So faced with the end of oil,

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it seems like investing in renewables

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is the smart financial decision.

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They're cheaper,

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and there is less risk of new projects

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becoming stranded

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and unprofitable in the future.

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"All of that is going to help us move away from oil.

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But it's not going to be overnight."

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Because according to all predictions,

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we're going to continue to need

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fossil fuels for a while.

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They're used as backup power

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when wind and solar aren't running,

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and widespread nuclear isn't likely

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to come online in time.

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Transport and energy storage also need to improve

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for us to be able to quit them entirely.

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But the more investment goes in,

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the more renewables improve.

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And we desperately need that

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to keep existing on this planet.

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But we are on the way.

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It's no longer a question of if, but when.

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Instead of being concerned about

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an end to our oil supply,

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we should be worried about

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pumping too much of it.

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With falling demand

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and a world shifting to renewables,

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it's not a smart decision,

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either financially or for our life on this planet.

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