Dear Jon: Shelf life for gasoline supplies endless, says Economist
I’m sure you’ve noticed that gasoline prices have stabilized, but there's more to the story. “Greenfield” emailed me and asked, “Dear Jon, when will gasoline run out?” Based on what I’ve found the real question should be, when will consumers move on to alternative forms of energy?
We depend on gasoline in our current place on the economic curve. We use it for cars and any other machine that requires the fossil fuel. But to hear the politicians tell it, we need to lessen our dependence on foreign oil, and that is happening.
But when will supplies run out? Some banking analysts with the world financial community estimate that gasoline supplies will run out by 2050. Economists say it's a matter of supply and demand, and that gas will never completely run out.
Financial giant HSBC released a report called Energy in 2050. In that report analysts said the world's 2050 energy output will not be able to meet the demands made on it by that year. A number of factors for this include a 110 percent increase in oil demand to fuel the estimated extra one billion cars on the road; a doubling of total energy demand and a doubling in the amount of carbon in the atmosphere. Not to mention new oil discoveries will be harder to find.
On the other hand, there are economists who report that oil prices are stable now for a reason: people are driving less and there's less of a demand for oil.
Economists contend there will always be oil in the ground that can be processed and used for gasoline. But they go on to say as gas prices rise people drive less and purchase more efficient cars so demand stays lower.
Eventually economists believe gas will become a niche good, and consumers will look to alternatives to gasoline such as electricity, solar power or hydrogen fuel cells. That’s slowly happening which is creating a shift away from gasoline powered automobiles.
So while consumers look elsewhere for fuel alternatives, less gasoline will be needed and economists say oil supplies will be used less and remain in the ground.
So who do you believe? There's plenty of evidence to ask “what are the consumers doing?” In the world market, if there is no money it, why process it?
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