What's a start to solve the world's oil crisis?

Question

It's for a project at school. We have to invent a company to solve the world's oil crisis!

Answer 1

Wow. This question (from your teacher) presumes a great deal.

Let's start from the beginning (always a good idea :D). This is LONG but please be patient as there are a lot of issues that need to be considered.

Oil is traded through one of the few truly global markets. No individual company or even country has a direct significant impact on the world's supply. Even a country with a very large "supply" such as Saudi Arabia or a cartel such as OPEC has less power than 30 years ago. Demand is a bit different but much more difficult to control. Oil demand is relatively inelastic. That means that it generally takes large price changes to have a noticeable effect on demand. Additionally, demand is decentralized. In other words, it's easier to coordinate the actions of 100 companies and countries on the supply side than it is to coordinate the actions of 6 billion people on the demand side.

The main problem with oil/oil markets is their relative lack of supply transparency. The global market is relatively transparent from a price standpoint, as evidenced by the fact that the prices of different (regional) grades of oil move in approximately the same way day-to-day. However, what is VERY opaque is what supplies exist.

A definition needs to be made with regard to "supply." There IS a great deal of oil left in the earth. Estimates vary but if it were all in a giant pool accessible at current costs, we would have no problems at all (given current demand). However, there are two other steps before it can be "brought to market." First, the oil has to be found. Oil that is found is called proven reserves and it is generally what we mean by the total stock of oil available. Countries and companies may revise their estimates of proven reserves over time so that even if no "new" oil was discovered and production not actually increased it is possible that the "supply" (meaning proven reserves) goes up. The other measure of supply is production. This is the process of actually getting the oil out of proven reserves and to the market. Since this is an economic question, either the definition of supply as proven reserves or production may be relevant.

Now, back to the presumption of your teacher's question. The question presumes there exists a world oil crisis. What this really means is unclear but most people refer not to the end of oil but rather to the end of "cheap oil."

For a very long time (naturally) producers used the easiest oil sources first. Generally, this includes any oil found on land in an inhabitable area derived from drilling an oil well for the purpose of extraction. That's a pretty decent way of getting oil but as a source it IS dwindling. What is becoming more prominent is the use of offshore drilling rigs to extract oil from the seas. This began a long time ago, but more recently it has grown in importance. In a couple years, a drilling rig will be able to drill in 12,500 feet of water - that's more than the average depth of the world's oceans! Offshore drilling and in particular deepwater drilling is a viable source of oil at moderately high market prices which allow the producers to at least break even or turn a profit.

Another source of oil that is gaining prominence is oil sands and oil shales. Look this up on wikipedia if you'd like more information. Generally, oil sands and shales are good large sources of oil at higher oil market prices. Venezuela and Canada are two countries with large deposits.

The fundamental problem in the world's "oil crisis" is not the amount of oil still in the earth. The real problem is the transparency of the supply and other "aboveground" factors such as politics and economics. No single company is going to solve these problems although many companies working together in either a cooperative way or competitive way will work. Some types of companies that may contribute are as follows:

1. A company that improves seismic imaging technology to get better information on where and how much oil is in the ground at a location.

2. An advisory/information/consulting company that provides advice on how to operate an oil company efficiently.

3. A trading exchange like the New York Stock Exchange (there are some such as the NYMEX) which allow for greater transparency in the world's oil market.

4. A company that improves the technology for extracting oil from non-conventional sources such as oil sands/shales or deepwater offshore fields.

5. A company that makes transportation more fuel efficient. Estimates vary but 60-85% of the oil in the world is directly for transportation. Automobiles are a part of this but they are not the only ones and therefore increasing fuel-efficiency standards for cars alone will not resolve the issue. A company that can address fuel efficiency standards across the map (planes, ships, cars, etc) will go a long way towards impacting demand.

There are plenty of choices but the best way to go about this is to think about what the ACTUAL issues are and see how you can come up with a concept for a company that will fulfill the needs that arise from those issues.

Answer 2

Start a research and development company dedicated to alternative energy sources. During WWII, the US government got a large group of our best scientists together for the express purpose of speeding the conclusion of the war. Within one year, these people developed the atomic bomb which ultimately ended WWII.

The new company would hire the best and most brilliant scientists to develop an alternative energy source that produces less environmental damage than oil. Within one year, a new source of energy would be refined. This accomplishment would severely dampen the demand for oil and oil prices would fall.

You have solved the oil crisis, developed a new energy alternative and saved the world from a pollution crisis. Go to the head of the class.

Answer 3

There is no world oil crisis,there is lots of oil still to find.only 5% of the world has been explored so far for oil reserves.Invent a company that finds oil and does it well you will solve the invented crisis.

Answer 4

Google "heavy oil"

There is no "oil crisis" - the supply of light, sweet oil is dwindling - well, that's an overstatement, but there's clearly a supply issue.

There's no shortage of heavy oil. It is more costly to refine and burns dirtier but it's closer to the surface, thus drilling costs are lower.

A start to the world's so-called "oil crisis" would simply be better air purification and filtering systems to cut down on the environmental impact from heavy oil refining.

Answer 5

Oil is a fossil fuel hence its quantities are limited in reserves & in order to solve World's Oil Crisis we must on one hand find,develop & imply alternate means of energy such as Solar Energy, Nuclear Energy etc, control our Energy consumption and tap its Waste and on the other hand try and find and help other Countries (especially poor) to discover & develop more Oil reserves.The Governments in the West (especially G-8 ) who are the biggest consumers of Oil should try and implement a Law not to disturb the OPEC ( Oil Prodcing Nations) by War threats and not to invade them and solve problems with them Politically, there should be a will from all sides. I think this foundation is enough for you to write your paper and you may ask for more details from me whenever,ifever and howsoever you like,thankyou.

Answer 6

There is no crisis. The scare stories are disinformation spread by the oil companies so they can gouge us. Oil is abundant, cheap, and clean. Pollution is like spitting in the ocean. See who benefits from these scare tactics and you will realize how your mind is being controlled.

Answer 7

Look into coal to gas technology and back it up with taxes on imported oil. I hope that helps give you some ideas. Other tech will be available too, but this is the most logical choice as it will not make the gas engine obsolete and we hold the worlds largest coal reserves. I can't spoon feed the entire thing to you as you will not learn, but hope I pointed you into a good direction.

Answer 8

Sell energy futures in the wind energy market. There will be lots of wind farms coming up in the next few decades. Those who get i on the gound floor will reap huge profits. As oil becomes more scarce, wind energy becomes more profitable and more viable. The market drives the price.

Answer 9

Coal gasification (not so green, but still not oil)
Solar (decentralized installation of solar panels on houses)
Wind generated electricity (centralized or decentralized)

Trash gas (methane from landfills) collection and distribution

Answer 10

Start investing in alternative ways of power like nuclear plants