Export declines in the era of waning oil abundance

As the era of oil abundance starts to wane, geopolitical relations between consuming countries and producing countries will grow increasingly important. Consumer countries are going to be forced to pursue substitutes and alternative ways of living. Paramount for them is the speed and manner with which their imports will decline.

If the decline proceeds too rapidly, it will wreck the economy instead of providing needed incentives for the transition away from oil. Self-sufficient producer countries, on the other hand, can choose to either continue their oil dependence as long as their own supplies last, or to start substituting and developing alternate ways of living. The latter would be more sensible from a long term economical perspective. The major question in this issue is what exporting countries will do with the oil they do not need themselves? Will they keep more oil for their own future or will they continue, and when possible increase, exports to gain economic benefits in the present?


At what speed will exports decline?

Geological and political factors will determine the decline rates.

1.

Geological in the sense of the amount and type of oil-exporting countries on which a consumer country is dependent. Are they mainly countries past peak or will they, for a while, still be on the production upslope? Are their exporting countries fields mainly onshore (slow declines), shallow water (fast declines) or deepwater producers (fastest declines)? Are there new oil countries or regions to import from remaining such as the Caspian Sea and the Arctic?

2.

Political in the sense of economic situations, stability and political motives. Are they politically stable or unstable countries with volatile exports? Are they forced to continue exports because of their economical situation or more prone to reduce exports because of concerns about future energy supply? Are the exporting countries likely to switch exports to other countries for political or economical reasons?

In answering these questions an estimate can be obtained for the speed of decline and the relative risk importing countries faces in a future world with a scarce supply of oil. For starters, data on the net imports for a consumer country can be identified. Net imports are here defined as: Nt = (lc – Ec) + (lp – Ep), where Nt = net imports, lc = Crude oil imports, Ec = Crude oil exports, lp = Oil product imports, Ep = Oil product exports. By doing this exports are subtracted from imports to avoid double counting. For example, country A imports 100,000 barrels per day (b/d) from country B and country B exports 50,000 b/d back to country A. Gross Imports statistics for country A would show 100,000 b/d of imports while net imports are only 50,000 b/d.

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