Peak oil: Scenarios of oil production peak and decline Bachelor’s thesis seminar in Economics, Anna Särkilahti

What is ”peak oil”? Peak oil: The hypothetical point in time when the global production of oil reaches its maximum rate, after which production will gradually decline Demand for oil is continuously growing, due to world population growth and the rise of developing countries There is uncertainty in the amount of current oil reserves, especially for those countries in OPEC Although oil itself is not necessarily scarce, oil production needs more and more resources and energy when production moves away from easily accessible sources (to e.g. unconventional sources) Always talking about demand and supply at a given price Question marks: technology improvements in production, oil substitutes, climate change Assumptions behind the concept Definition (Oxford dictionary):

Demand growth strong in developing countries Supply growth mainly from unconventionals, substitution with biofuels and NGLs Oil supply and demand Source: BP Energy Outlook 2035 (2014)

Research questions The thesis will focus on evaluating the possible economic scenarios of the peaking of oil production and the following decline in oil production Some points to draw from the individual scenarios: How will oil supply develop in the following decades, including the use of non- conventional oil resources? When oil price increases, how will demand and supply for oil change, for example what is the effect of introducing substitutes or more energy efficient alternatives? What are the most vunerable sectors of economy for a possible oil shortage following the peak oil? What will happen to economic growth in different scenarios of the world after peak oil?

Possible structure of the thesis Peak oil background Short introduction to oil supply and demand Different scenarios about future oil production (especially peak oil and the following decline in production) Evaluation of the scenarios and their likelihood

Some potential sources Peak oil: Lutz, C., Lehr, U., Wiebe, K. S Economic effects of peak oil. Energy Policy 48() 829–834. Kerschner, C., Prell, C., Feng, K., Hubacek, K Economic vulnerability to Peak Oil. Global Environmental Change 23, 1424–1433 Hirsch, R.L Mitigation of maximum world oil production: Shortage scenarios. Energy Policy 36(2), Nashawi, I.S., Malallah, A., Al-Bisharah, M Forecasting world crude oil production using multicyclic Hubbert model. Energy and Fuels 24(3), Okullo S.J., Reynès F., Hofkes M.W Modeling peak oil and the geological constraints on oil production. Resource and Energy Economics, 40(2), Oil supply, demand and oil price formation: Kilian, L The Economic Effects of Energy Price Shocks. Journal of Economic Literature, 46(4),