This week’s oil prices put the industry at a value of $1.7 trillion – almost three times larger than the $660 billion in revenues generated from all major raw metals and minerals combined.
Figures compiled by the Visual Capitalist show that the sheer magnitude of international oil consumption will increase as countries leave coal behind and plan for the spread of natural gas and green energy.
For the sake of comparison, gold, the largest raw metal market by dollar value, stands at one-tenth the size of Big Oil. Iron, the second most popular mined and traded metal, generates $115 billion in revenues for companies and governments.
(Click to enlarge)
Oil producers extract 34 billion barrels of oil from the planet every year to provide the 94 million bpd the planet consumes to travel, build and illuminate.
The ascent of oil as the most-valuable commodity on Earth after food and drugs speaks to the technological progress that humans have made since the commercialization of the internal combustion engine in the 1860s, as pointed out by Zero Hedge.
The contraption allowed modern modes of transportation – notably, cars – to spread all over the world, one vehicle at a time.
Data from the International Energy Agency shows that 45.4 percent of global crude oil consumption in 1973 fulfilled transportation needs. By 2012, that figure rose to 63.7 percent, suggesting that one significant reason for the rise in oil demand has been spurred on by expanding human mobility.
The International Air Transport Association estimates that the number of passengers will double by 2035 to 7.3 billion. The fuel efficiency of airplanes will surely improve over the next twenty years, but innovations are unlikely to keep up with the skyrocketing travel wishes of a rising global middle class, particularly in Asia.
Though climate change activists encourage the abandonment of all three major fossil fuels: coal, oil and natural gas—and with good reason—it’s important to understand the intermediary position of oil as nations begin to quit coal and work toward embracing natural gas and renewable energy sources.
As a cheap and mobile source of energy, coal—the most potent polluter of the fossil fuel trio—has powered the industrial revolutions of the United Kingdom, the United States, China and now, India. Not a single one of the world’s raw metals can make that claim.
And for as much as environmentalists today look scornfully upon oil, the U.S. Energy Information Administration estimates that using oil produces roughly 20 percent less carbon dioxide than burning coal.
An estimated 20 percent of India’s population—a group roughly equal in size to three-fourths of the U.S. population—does not have access to electricity. For now, Prime Minister Narendra Modi plans to bring the essential amenity to the poorest regions of his country with inexpensive coal.
Just like the massive countries that preceded India in hitting their development stride, the Asian giant will eventually curb coal consumption and adopt oil and natural gas—which is not to say that every country has or needs to follow the three-step process.
Over four million vehicles in Pakistan utilize compressed natural gas, and the country has already begun the process to make liquefied natural gas (LNG) widely available in its urban areas. But LNG adoption requires intensive infrastructure developments that take time and money to acquire and bring into operation. A second challenge is the fact that natural gas is, in fact, a gas—presenting yet another unique transportation challenge for all countries.
These hurdles will slow the transition to LNG and other energy types, allowing oil to maintain its leader-of-the-pack status for the foreseeable future.
Over the next few years—even while coal brings the power of light and Internet connectivity to some of the most impoverished areas on the planet, and as developing countries construct pipelines and related facilities to effectively distribute natural gas — oil demand will continue to rise.
By Zainab Calcuttawala for Oilprice.com
More Top Reads From Oilprice.com:
- The Drone War Is On: Australian Startup Beats Google, Amazon
- Why Oil Could Head Back To $90 Sooner Than Thought
- Oil Titans Differ On Whether Prices Will Spike Or Remain Low