The onset of the 20th century saw the development of many technological breakthroughs that necessitated oil as a preferable source of energy. The demand for electricity and ownership of automobile grew exponentially and so did the demand for oil. For the last many decades, oil has been one of the most important commodities and has mainly been the backbone of this industrial revolution.
With energy being a key factor of production, almost every industry from mining, aviation, manufacturing to transport and others, in some form depends on oil. In order for any kind of machinery to work for you, there needs to be some form of energy – mostly oil. Oil is the third largest industry in terms of revenue. Life & Health insurance industry leads at $4.4 trillion and Pension & Funds at $3.6 trillion, Oil & Gas ranks third valued at a total $3.3 trillion. If compared with economy sizes, the industry can easily stand fifth largest economy after giant economies like the US ($21.4trn), China ($14.3trn), Japan ($5.1trn) and Germany ($3.8trn).
Being in control of oil is a great position to be in. It is the number one internationally traded commodity and plays a key role in the economic development of the global economy. For instance, Saudi Arabia is the leading exporter of oil which accounts for 80% of the economy’s exports to become the 18th largest economy. Similarly, Iran is the 29th largest economy with oil accounting for 60% of the economy’s exports.
Though oil will continue to maintain its importance for the next many coming years, there is a sense of efforts being made by different countries to find the next ‘oil’. Countries are finding and improving alternative sources of energy and reducing dependency on oil. In the near future, 50% of the world’s electricity will be produced from renewable energy. Major oil companies are in their early stages of transformations in the industry making investments in renewable energy. BP (BP) for instance, announced its plans to increase spending on renewable projects to produce net zero emissions by 2050.
Climate change is definitely one major driver for this effort. It is without a doubt that by now the world is aware that reliance on oil and gas leads to calamities including floods, drought and firestorms.
However, to an extent the search for the next big oil is also motivated by the need for different countries to become the next leader in alternative energy sources and technology in coming years. China and the US are taking the lead in alternative energy expenditures. Notably, the competition is also going strong on EV front. Again, China has the highest percentage of electric vehicles sold. As the world shifts to a new era of unconventional oil, the coming decades will determine which economies turns out to be the world leaders in discovering the next ‘oil’.
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