Global oil risks in the early 21st century

Dean Fantazzini, Mikael Hook and André Angelantoni

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Peak oil; Economic risks; Energy transition risks; Government risks; Business risks (search for similar items in EconPapers)
JEL-codes: Q30 Q31 Q32 Q34 Q47 Q48 (search for similar items in EconPapers)
Date: 2011-02-01
New Economics Papers: this item is included in nep-cwa and nep-ene
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Journal Article: Global oil risks in the early 21st century (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:33825

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