Global economy is too dependant on oil

Our economy and society in general is still over-dependant on fossil fuels such as oil and natural gas. Reducing the use of fossil fuels by making a transition to renewable energy seems like the only logical move to improve the environmental condition of our planet, and in particularly to tackle climate change.

But a transition to renewable energy and reduced dependence on oil would also benefit the global economy because the decreasing oil supply is having a devastating impact on global economy too.

In fact, according to a James W. Murray, professor of oceanography at the University of Washington, the tipping point for oil supply has already occurred in 2005. Since 2005 there was no increase in productivity after the oil prices started to grow and a global oil production stopped at 75 million barrels per day in spite of price increases of 15 percent each year. This has resulted in a volatile oil price market. In fact production at oil fields around the world is said to be decreasing at a rate between 4.5 percent and 6.7 percent per year.

There have been various reports about the increasing oil reserves but Murray highly doubts these numbers because „these reports are clouded by secrecy; forecasts by state oil companies are not audited and appear to be exaggerated. More importantly, reserves often take 6 -10 years to drill and develop before they become part of the supply, by which time older fields have become depleted."

Murray also believes that the same can be applied with the reports about tar sands or shale gas fracturing as they also tend to be much exaggerated. He added that shale gas is not cheap to produce and also pointed out that a production at shale gas wells can decrease 60 to 90 percent in the first year of operation.

Since the World War II, ten of 11 U.S. recessions were preceded by a spike in oil prices and author also implies that there is a strong link between the growth of oil production and global economic growth.

The short-term success of global economy will therefore be highly dependant on increased oil production and in order to achieve this world will need to ensure „improved efficiency of oil use as well as more energy-efficient growth or rapid substitution of other fuel sources“.

Murray also warned world leaders that they need to recognize that "the high price of energy is a central problem for global economy and that they still haven't identified the necessary solutions: weaning society off fossil fuel."