The concept of peak oil has been devised to reflect scarcity Essay

The concept of peak inunct has been devised to reflect scarcity associated with vegetable oil supplies. But surely the price of oil would be a more cost-effective indication of its scarcity - Essay ExampleIn contrast to the peak oil concept, global oil production showed a decline from its peak agitate at 74 mb/d in 2005 however, after a short decline the figures rebounded, and in 2011 there were higher production of oil than 2005 (US zippo information and administration, 2011). Peak oil is ascertained by taking into account extraction sum ups from each oil well, the predicted oil reserves, and total extraction rate of an oil field comprising of associated oil wells (Berdell, 2011). Here the core contentious issue is that the concept of peak oil, which had been devised to reflect oil scarcity, is an ambiguous indicator of scarcity. Instead, whatsoever economists content that oil prices prove to be a more efficient indication of the scarcity of oil.Various experts contend that o il scarcity is dependent on the rate of consumption, where constraints placed on supply side are based on product demands. James L. Smith in his research papers, using bench mark scenario, high growth scenario and low growth scenario graphs, proved that peak timing is inconsistent as an indicator of oil scarcity (2011, pp. 8-13). Observations revealed that during 2007-08 economic crisis, despite oil supplies not increasing, there was loosening in the oil scarcity factor, owing to low demand. The equation for supply-demand graph can be plotted effectively by dint of the factor of pricing, hence making oil prices a better indicator for its scarcity.Natural oil does not have each uniform or any standardised quality, and tends to vary significantly, which range from medium quality oil, to oil with high API gravity (high quality) from Saudi Arabian field, to low API gravity (poor quality) heavy oil from fields in South America and Canada. Despite reports of fall in high quality oil lev els, as far as supply of heavy oil is concerned, there is no scarcity, and many oil fields in deep-water areas remain unexplored (Stier, 2008). The Saudi Arabian high API oils are relatively user-friendly to extract and oil