Oil shortages can be caused by technical limitations, political maneuvering, and capacity issues. Increased demand can create shortages, and supply shocks, technical and geological limitations, and politics can all contribute. Researchers use tools to estimate deposits and improve infrastructure, while political negotiations can reduce the risk of an embargo.
Oil shortages can be caused by a number of factors, including technical limitations, political maneuvering and capacity issues. This resource is considered scarce when supply cannot meet demand. Increased demand increases pressures on existing supplies and can create shortages. The world’s oil supply is limited to existing deposits and the ability to access and exploit them, which can become extremely expensive with some remote or complex deposits. Oil and fuel costs aren’t necessarily immediately linked to oil scarcity because there are other factors involved, but they definitely play a role.
One problem is a temporary supply shock. A classic example would be a hurricane damaging refineries, distribution centers, and pipelines in a region that processes large quantities of oil. This can cause temporary oil shortages because other facilities may not be able to take over. As soon as these facilities come back online and normal distribution resumes, supply should return to pre-storm levels. Preparing for such events can be challenging, involving thinking ahead of capacity issues that are difficult to predict.
Another contributor to oil shortages are technical and geological limitations on supplies. Some deposits are simply not accessible at all, while others require more labor intensive to reach usable oil. Production capacity may be limited and may be hampered by the ability to transport, store and process oil. An imbalance in the global distribution of container ships, for example, can mean that there is oil waiting for transport to a location without ships picking it up.
Politics can also play a role in oil shortages. 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 access to it. The net effect of the oil shortage in this situation could be repeated in the future. Responses to this have included leveraging internal resources and building larger reserves to be better prepared for similar events in the future.
Oil scarcity researchers use a variety of tools to estimate the size of deposits, as well as the feasibility of reaching them. They also consider ways to improve infrastructure and capacity to make sure supplies aren’t constrained by these issues. Political negotiations can work to reduce the risk of an embargo where some nations may find it difficult to access fuel and oil supplies.
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