Category: 

What Causes Oil Scarcity?

Article Details
  • Written By: Mary McMahon
  • Edited By: Shereen Skola
  • Last Modified Date: 21 November 2016
  • Copyright Protected:
    2003-2016
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
The Argentinian resort town of Epecuén was submerged by flooding for years; it is now populated by one elderly man.  more...

December 5 ,  1933 :  Prohibition ended in the US.  more...

Oil scarcity can be caused by a number of factors, including technical limitations, political maneuvering, and capacity problems. This resource is considered scarce when the supply cannot meet the demand. Rising demand increases pressures on existing supplies and can create scarcity. The world’s supply of oil is limited to existing deposits and the ability to access and exploit them, which can become extremely expensive with some remote or complex deposits. Costs for oil and fuel are not necessarily immediately linked to oil scarcity because there are other factors involved, but they certainly play a role.

One issue is a temporary supply shock. A classic example might be a hurricane that damages refineries, distribution centers, and pipelines in a region that processes large volumes of oil. This can cause temporary oil scarcity because other facilities may not be able to take over. As soon as these facilities get back online and normal distribution resumes, the supply should return to pre-storm levels. Preparing for such events can be tricky, as it involves thinking ahead to capacity problems that are difficult to predict.

Ad

Another contribution to oil scarcity is technical and geological limitations on supplies. Some deposits simply cannot be accessed at all, while others require more intensive work to reach usable oil. Production capacity can be limited and may be hindered by the capacity for transporting, storing, and processing the oil. An imbalance in the global distribution of container ships, for example, can mean that there is oil waiting for transportation in one location without any ships to pick it up.

Politics can also play a role in oil scarcity. In the 1970s, an oil embargo in the Middle East led to a crisis in other nations as access to reserves was effectively cut off. Oil was available for use, but most nations were not allowed to access it. The net effect of oil scarcity in this situation could be repeated in the future. Responses to this have included exploiting domestic resources as well as laying in larger reserves to be better prepared for similar events in the future.

Researchers on oil scarcity use a variety of tools to estimate the size of deposits, as well as the feasibility of reaching them. In addition, they consider ways to improve infrastructure and capacity to make sure supplies are not limited by these issues. Political negotiations can function to reduce the risk of an embargo where it might become difficult for some nations to access fuel and crude oil supplies.

Ad

You might also Like

Recommended

Discuss this Article

SarahGen
Post 3

Oil is scarce because most of the oil that's left in the world hasn't been discovered yet or it's located in difficult to get places, like undersea.

stoneMason
Post 2

Don't wars also lead to oil scarcity? A lot of oil is used during wartime.

Also, the more developed a country, the more oil it uses. This is why people are so worried about China and India's development. They have huge populations and if everyone there starts driving cars, they will use up a lot of oil.

bluedolphin
Post 1

Oil isn't really as scarce as it seems. It seems that way because we don't have access to all the oil the world has. The world's oil is controlled by OPEC-- Organization of the Petroleum Exporting Countries. They decide which countries will have access to how much oil.

This is both good and bad. It's bad because it can lead to scarcity when there really isn't one. It's good because oil prices have a huge impact on economies. If there wasn't an organization that controlled prices through limiting access to oil, the world economy would be very unstable.

So the reason that oil is "scarce" is mainly because of OPEC.

Post your comments

Post Anonymously

Login

username
password
forgot password?

Register

username
password
confirm
email