![]() ![]() Once a supply shortfall materializes, the US will be in competition with China, Japan, India and other importing countries and the cost of per barrel of oil will skyrocket. Now four barrels of oil are consumed for every one barrel discovered. Oil and gas experts are predicting that world oil production will peak sometime in the latter half of this decade. Gradually with no new reserves being discovered the predictions were proved correct.Īccording to Hubbert Curve, in any oil field as more wells are drilled and newer and better technology is installed production initially increases but after a peak output is reached oil production not only declines but also becomes less cost effective. Hubbert Curve’s, a predictive model which runs from discovery through to depletion of a resource, which predicted that crude oil production in US would peak in 1970’s and then eventually decline was treated with great scepticism because production in US was increasing and technology was improving. Because of this high dependency any disruption in supply will affect US economy drastically. ![]() With only 5 percent of the world’s population US enjoys 25 percent of the world’s fossil fuel and imports about 75 percent of its requirements and has 2 percent of the reserves. Inexpensive oil based energy was the main reason behind its success story. The US economy was able to enjoy unprecedented prosperity in the 20 th century. Starting from transportation, heating and other amenities, higher oil prices are eventually reflected in all finished products as sellers try to put the burden of higher input prices on their consumers. There’s no doubt in the fact that black oil is a significant input of each and every economy and with it comes inflation negatively impacting the global economy. ![]() Have you ever wondered how U.S Dollar, Gold and Crude oil prices have managed to rule over the world? Edited by Namrata Caleb, Senior Editor, The Indian Economist ![]()
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