Question: According to the Oil & Gas Journal, the proven oil reserves existing in the world in 2012 consisted of 1,525 billion barrels. In that year, the U.S. Energy Information Administration reported that the world daily oil production was 75.58 million barrels a day.
a. At this rate, for how many years will the proven oil reserves last? Discuss the Malthusian view in the context of the number you just calculated.
b. In order to do the calculations in part a, what did you assume about the total quantity of oil reserves over time? About oil prices over time? Are these assumptions consistent with the Malthusian view on resource limits?
c. Discuss how market forces may affect the amount of time the proven oil reserves will last, assuming that no new oil reserves are discovered and that the demand curve for oil remains unchanged.