What Causes Oil Scarcity?

Mary McMahon
Mary McMahon
A pumpjack oil well.
A pumpjack oil well.

Oil scarcity can be caused by a number of factors, including technical limitations, political maneuvering, and capacity problems. This resource is considered scarce when the supply cannot meet the demand. Rising demand increases pressures on existing supplies and can create scarcity. The world’s supply of oil is limited to existing deposits and the ability to access and exploit them, which can become extremely expensive with some remote or complex deposits. Costs for oil and fuel are not necessarily immediately linked to oil scarcity because there are other factors involved, but they certainly play a role.

An offshore oil platform. It can be difficult and expensive to extract oil from under the ocean.
An offshore oil platform. It can be difficult and expensive to extract oil from under the ocean.

One issue is a temporary supply shock. A classic example might be a hurricane that damages refineries, distribution centers, and pipelines in a region that processes large volumes of oil. This can cause temporary oil scarcity because other facilities may not be able to take over. As soon as these facilities get back online and normal distribution resumes, the supply should return to pre-storm levels. Preparing for such events can be tricky, as it involves thinking ahead to capacity problems that are difficult to predict.

The distribution of tankers can affect oil shipping times and rates.
The distribution of tankers can affect oil shipping times and rates.

Another contribution to oil scarcity is technical and geological limitations on supplies. Some deposits simply cannot be accessed at all, while others require more intensive work to reach usable oil. Production capacity can be limited and may be hindered by the capacity for transporting, storing, and processing the oil. An imbalance in the global distribution of container ships, for example, can mean that there is oil waiting for transportation in one location without any ships to pick it up.

Hurricanes can disrupt oil production by shutting down oil platforms and coastal refineries.
Hurricanes can disrupt oil production by shutting down oil platforms and coastal refineries.

Politics can also play a role in oil scarcity. In the 1970s, an oil embargo in the Middle East led to a crisis in other nations as access to reserves was effectively cut off. Oil was available for use, but most nations were not allowed to access it. The net effect of oil scarcity in this situation could be repeated in the future. Responses to this have included exploiting domestic resources as well as laying in larger reserves to be better prepared for similar events in the future.

Damaged pipelines may cause a temporary supply shock.
Damaged pipelines may cause a temporary supply shock.

Researchers on oil scarcity use a variety of tools to estimate the size of deposits, as well as the feasibility of reaching them. In addition, they consider ways to improve infrastructure and capacity to make sure supplies are not limited by these issues. Political negotiations can function to reduce the risk of an embargo where it might become difficult for some nations to access fuel and crude oil supplies.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a InfoBloom researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a InfoBloom researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

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Discussion Comments

SarahGen

Oil is scarce because most of the oil that's left in the world hasn't been discovered yet or it's located in difficult to get places, like undersea.

stoneMason

Don't wars also lead to oil scarcity? A lot of oil is used during wartime.

Also, the more developed a country, the more oil it uses. This is why people are so worried about China and India's development. They have huge populations and if everyone there starts driving cars, they will use up a lot of oil.

bluedolphin

Oil isn't really as scarce as it seems. It seems that way because we don't have access to all the oil the world has. The world's oil is controlled by OPEC-- Organization of the Petroleum Exporting Countries. They decide which countries will have access to how much oil.

This is both good and bad. It's bad because it can lead to scarcity when there really isn't one. It's good because oil prices have a huge impact on economies. If there wasn't an organization that controlled prices through limiting access to oil, the world economy would be very unstable.

So the reason that oil is "scarce" is mainly because of OPEC.

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    • A pumpjack oil well.
      A pumpjack oil well.
    • An offshore oil platform. It can be difficult and expensive to extract oil from under the ocean.
      An offshore oil platform. It can be difficult and expensive to extract oil from under the ocean.
    • The distribution of tankers can affect oil shipping times and rates.
      The distribution of tankers can affect oil shipping times and rates.
    • Hurricanes can disrupt oil production by shutting down oil platforms and coastal refineries.
      Hurricanes can disrupt oil production by shutting down oil platforms and coastal refineries.
    • Damaged pipelines may cause a temporary supply shock.
      Damaged pipelines may cause a temporary supply shock.
    • The oil embargo in the Middle East during the 1970s led to scarcity.
      The oil embargo in the Middle East during the 1970s led to scarcity.
    • The global distribution of container ships can produce imbalances in oil distribution.
      The global distribution of container ships can produce imbalances in oil distribution.