The Supply and Demand of Energy and Oil

Thomas Edison invented the light bulb in 1879. The first oil well was drilled in Pennsylvania in 1859. Since those two historic discoveries, technology and industry have exponentially grown to a point of absolute necessity today. The requirement of energy and oil throughout the world grows with advancement. As developed countries, like the United States, Japan, China, and Canada, progress and grow in population, more demands for energy and fuel are created. Likewise, as less advanced countries bring themselves into the global economy, they will also have increased energy and oil demands. So then the question begs, where are the resources for these demands coming from and what options will there be for future demands? Given current needs and forecasting the global needs of the future, a brief economic analysis will show what the world is up against.

Energy and oil have a direct relationship. Energy is the electricity, heat, and fuel needed to power all the aspects of human lives. Oil itself is the main resource for energy, contributing 37% to the global energy supply. Specifically, oil as a source of fuel is used to power the majority of transportation throughout the world. However, it also has significant use in heating and making electricity. There are many other sources of energy as well. The second largest provider of energy is coal, which accounts for about 25% of the world’s energy consumption. Gas covers 23% of the energy need. Other sources include nuclear power, biofuels, hydro power, solar heat and light, and wind. All of these forms of energy contribute to the global energy supply, with oil being the most heavily relied upon.

Now the world faces a problem. The top three energy providers, accounting for about 85% of the word’s current energy supply, are non-renewable fossil fuels. Primarily, oil is at a premium because of political unrest (rightward shift in supply), reserves are at the beginning stages of drying up (rightward shift in supply),