Collapse

Our Outlook reflects oil production naturally declining at a rate of about 15% per year. That’s nearly double the IEA’s prior estimates of about 8%. This increase is the result of the world’s shifting energy mix toward “unconventional” sources of oil and natural gas. These are mostly shale and dense rock formations where oil and gas production typically declines faster. To put it in concrete terms: With no new investment, global oil supplies would fall by more than 15 million barrels per day in the first year alone. At that rate, by 2030, oil supplies would fall from 100 million barrels per day to less than 30 million – that’s 70 million barrels short of what’s needed to meet demand every day.

The world would experience severe energy shortages and disruption to daily lives within a year of investment ceasing. Given price responses to past oil supply shocks, the permanent loss of 15% of oil supply per year could raise oil prices by more than 400%. By comparison, prices rose 200% during the oil price shocks of the 1970s. Within 10 years, unemployment rates would likely reach 30%. That’s higher than during the Great Depression of the 1930s.