At this time in our world’s history, oil is a relatively inexpensive way to produce energy, fuel and other products. This allows the economies of countries all over the world to grow as fast as they can, leveraging this cost-effective fuel to increase the reach of goods and services and opening up wider distribution for consumer goods and services. Even now, countries like China are experiencing the “oil boom” that the United States has been riding for decades, and they are seeing their economies blossom.
However, forward-thinking energy companies such as Triple Diamond Energy Corp. know that today’s oil prices aren’t going to last forever. One day the oil fields that are being tapped today will be exhausted. And when that happens, economies across the globe will feel the sting of rising energy costs. The reason for this is because of something called “peak oil,” a situation that the oil-hungry world is rapidly accelerating towards faster than ever.
‘Cheap’ Oil Vs. Peak Oil
Much of the oil that is sold on the open market these days is called “cheap oil” because the costs to extract and refine it are relatively low compared to other methods. By tapping oil reserves close to surface level, oil companies such as Triple Diamond Energy Corp. are able to extract what is known as ‘sweet’ oil, which simply means that the crude oil pulled from the ground has a low sulfur content. This makes sweet oil less expensive to refine than oil deeper in the ground that may have higher sulfur content.
Oil fields are typically drawn from until they reach a state called “depletion,” where the cost of extracting and refining no longer remains cost efficient, and the field is no longer tapped for crude oil. In other words, once the cost of pulling a barrel of oil from a field equals the revenue gained from it, the field is no longer worth developing. This creates a challenge for oil companies because the rising demand for oil far outpaces the rate at which it is being extracted.
Once demand for this precious commodity reaches the point where all the cheap oil is consumed, the more difficult to extract and refine oil must be harvested causing rising prices for everyone. In addition the rising prices, the more difficult-to-reach oil reserves will produce more slowly than the depleted cheap oil fields, and the available supply will diminish over time as countries demand oil faster than it can be produced.
The term “peak oil” describes this phenomenon. Instead of oil sales steadily rising, overall sales will decline with limited availability and prices will rise far past the point where they are now. To avoid the consequences involved with peak oil, companies like Triple Diamond Energy Corp. are searching out new oil fields close to surface level as quickly as possible, as well as leveraging other energy sources such as cleaner-burning natural gas.