re: Oil and gas folks please explain the whole oil /gas scarcity thing to me

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Hasn’t stuff been dying and rotting for millions of years? So how are we running out of oil and gas? I’m no petroleum engineer but it seems unlikely to run out.

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1. The “scarcity” that drives global oil prices isn’t due to “running out,” at least not in the sense of reserves. Global oil production is as high as it’s ever been (or at least almost as high; I’m not 100% sure whether global production has exceeded its pre-COVID peak yet).

The issue is simply keeping up with global demand. Scarcity is created artificially via OPEC production quotas in an effort to keep prices high. The companies who actually operate in a competitive market (e.g. the rest of the world) don’t really keep production capacity “on tap,” so to speak, because they need to recoup their drilling costs. So it takes time for non-OPEC production to respond to price/demand swings.

2. We are probably using oil faster than it can be replenished, but it also probably doesn’t matter. People have been talking about “peak oil” - the time when global production will theoretically peak and then start to fall due to supply constraints - for decades. It hasn’t happened. Drilling & completion technology has continued to improve, giving us access to reserves that were previously non-viable.

It seems likely that peak oil probably will happen eventually, but not for the reasons people historically have predicted. Instead of supply constraints leading to unsustainably high prices, it now seems likely that demand will eventually decline to the point where it’s no longer economically viable to further increase production.