The oil market. A view from the past to the future. Alexander Sivtsov.
In this article I will tell about the development of the oil market and its possible future in the conditions of the development of modern technologies.
Industrial production of oil originates in the middle of the 19th century. Before that, oil was extracted from oil wells in places where black gold broke out onto the surface under the pressure of the earth’s crust. Basically, oil was used as an energy resource for heating and lighting. Over the years, the use of oil has become more extensive and it has been used to produce various materials and even medicines, but still black gold is primarily used as an energy resource.
A look back into the history
Even before mankind began to use oil more and more in everyday life, a blubber or, more simply, whale oil was used in European countries for lighting and heating. Whaling began in the 800-1000-ies of our era, the main purpose of which was the extraction of whale fat as an energy resource. The extraction of fat in the whaling began to play a role only from the second half of the twentieth century, since oil was replaced by whale oil. Nevertheless, about 46,000 whales a year were used to extract whale oil in 1937-1938. Naturally, oil production is not the only reason for the decline in whaling. Even today, around 800 whales are used in the world for meat production, research and medical applications. So, the whaling industry has been more than 1200 years old and is still of current interest, albeit at a lower level. While the mass production of oil lasts less than 200 years.
Oil versus renewable energy sources
With the development of technology in our time, the main obstacle to the growth in demand for oil is the development of alternative energy sources. Therefore the construction of thermal power plants around the world where oil products are partially used is also declining. Mankind is increasingly beginning to use solar panels and wind generators, which in the future will be able to displace heat and even nuclear power plants. Naturally, this will reduce the demand for oil, but only partially.
Electric motor versus internal combustion engine
Every year more and more companies are developing electric motors for cars that can already perfectly withstand internal combustion engines. Few people know that the first car on the electric motor was created back in 1841, even before the internal combustion engine. But at that time the technology was far behind today’s and the main problem was charging the battery of such cars. Also, there is an opinion that Henry Ford, who was famous all over the world, went on a deal with John Rockefeller. The deal implied that Ford would launch cars on an internal combustion engine in mass production (although Ford had a prototype of an electric vehicle at that time), which triggered a significant increase in demand for oil.
Today the situation has changed and electric cars are gaining popularity that is why the demand for cars with an internal combustion engine will decrease. But, will it be able to decrease the number of latter to zero? Despite the cheaper fuel and, according to the manufacturers, cheaper maintenance, the main disadvantages of electric cars are the autonomy of the work and the speed of charging, which directly affects the comfort of the consumer in the event of a longer use of the car throughout the day. Also, one of the problems is the use of electric cars in low-temperature conditions, as the performance of the batteries can be reduced by almost three times.
A look into the future of oil
Imagine that in the future the number of electric vehicles on the roads will be about 50% of cars on an internal combustion engine and these cars will need to be recharged. Simultaneous charging of a large number of batteries for electric cars will exert a very heavy load on the power grid, which will require their considerable modernization and entail an increase in the price of electricity. Under such conditions, a scenario is possible that refueling of two types of cars can become equal in value. At the same time a car on an internal combustion engine can become way cheaper than an electric car. One of the main reasons for the expensive cost of electric cars in the future may be their disposal, or rather the disposal of batteries, since they contain a large number of harmful substances. Based on these facts, people will always come to the conclusion “why would I pay more?”, which will keep demand for cars with an internal combustion engine for many decades and will have a positive impact on the oil market.
Oil as a raw material for various production
However, oil can still be replaced as an energy resource, but it remains indispensable in the production of certain things. This refers to the production of various chemicals, medicines, rubber, plastics and other materials that are actively used by mankind.
To date, the main reason for the decline in oil prices is the surplus of its production, but the demand remains fairly stable and grows every year, despite the development of alternative energy sources and electric cars.
To conclude this article, one can safely say that the oil market will exist until it is over, and when that day comes, nobody knows. Closely monitor the state of the oil market and earn at its quotations along with experts from the Ester Holdings Inc company.
Alexander Sivtsov