There was a period in history when gold was a major economic model in global economy. Latter other models like silver, copper etc followed. Finally oil emerged which has become so powerful economic model. With the current global shake in the oil market and the quest for both developed and developing economies on alternative energy, is it possible for oil to phase out in the nearest future?
Hi Dear, I do not thing so. In fact countries like South Arabia are building Solar Panels( see the link below. All technology revolution happen today according with green agenda, it is to make less depend the development countries from the unrecoverable natural resources include oil, so the future is not above the raw materials, its focus in removable resources. Which of them is go to be? Really, i do not known.
https://www.washingtonpost.com/national/health-science/solar-power-gets-attention-in-the-oil-kingdom/2015/07/31/95b461f6-2f1a-11e5-97ae-30a30cca95d7_story.html
Unlikely, and oil is likely to phase out. Interestingly all of oil's precursors you mentioned was somehow tied to the economic growth engine of the time. And we are at the cusp of another age:
- Gold & silver (colonialism and control of trade routes)
- Copper (electrification and industrialization.)
- Oil (mobility and individualism)
- Bioinformatics? (wellness and stewardship)
with each progression, the pivotal model has grown more detached from the actual economic transaction-from precious metals to genetic data.
Oil may not phase out too soon. It may take longer time to get a perfect replacement.
Moreover, I see a future where economic model is founded not just on one commodity but on complex integration of ability to solve man's most pressing needs.
Here is a paper I wrote in 2006 about the origin of money, first based on cattle, then gold and then dollars. This does not have anything to do with whether the current price of oil will go up or down, though I am not sure that the use of the word "model" in the question had anything to do with current prices going up or down either. I also discuss how chips from the major casinos in Las Vegas function as a sort of money in the local economy.
If oil exports from the Middle East were shut down by the Iranians closing the Strait of Hormuz during a war, it is possible that IOUs for oil might start trading like money and, even after the strait was reopened, they might continue to function as money.
http://www.axiomaticeconomics.com/zarlenga.php
Oil derives it's value from the fact that it can power machines, ranging from a diesel generator to a space shuttle.
Against the popular view of a conspiracy theory. I hold the opinion that oil has earned its current place. Earlier to the crude oil, it was gold. Gold, in those times, could, all by its own virtue, could finance resources ranging from land, equipment, and people. The same has been true for every standard that has ever existed - The true barter power of that commodity.
As oil, better to say crude oil, kept on expanding its range of applications, it was apparent that it would become a commodity more powerful than gold.
It derives it power from the fact that it could power a wide variety of machines. The price of land, equipment and people grew minuscule to what one could earn with the aid of oil. You can buy the latter three with oil, but the three, even combined, cannot purchase oil.
This reality established it as the foundation of the current economic model.
"A commodity that can, by itself, run an economy becomes the currency of that age."
As of now, we do not have any other currencies this powerful. If you want to replace oil, you need a commodity that can buy the resources necessary to drive the economy.
However, I use the word commodity in a wider perspective. The currency of the economy has been man-power (labour) - it could do things; copper, silver, gold (Commodities)- they could buy things to do things; Oil(fuel)- it could power machines to do a lot many things.
First-ever of economic models > Do it yourself >
(Afterwards) > Buy another to do it for you (the age of slave trading) >
> Buy another's services to do it for you (The age of copper- silver, gold) >
> Power a machine to do it for you (The age of externally powered machines- electricity, and so on)
> Power a machine to do it for you (The age internally powered machines - coal and so on)
> Power many machines with a single commodity (The age of oil, till 1970s) >
> (Yesterday) > Buy currencies that could buy oil to power the machines for you (The age of trade-able currencies) >
> (Today) > Age of generating currencies, to buy oil to power machines for you, out of thin air. (Trade-able stocks > Debts > Futures > reducing interest rates > negative interest rates >>> etc.) (The age of flexible trade-able currencies) >
Next>>
>> Option 1) > A fuel more powerful and versatile then oil to power the machines for you.
>> Option 2) > (I am working on it)
>> Option 3) > Machines that could power themselves, and do the work for you.
Such are my views.
P.S.: These ages do conflict with each other depending over the placement of various economies over the ladder of prosperity. Thus many models can co-exist in any given time-period.
El petroleo como primera opción energética debe desaparecer. Hoy existen alternativas que pueden ser costeables si hay cooperación internacional.
Measure the energy ratio (BTU Out/BTU In) for each of our energy inputs. As long as oil has the highest ratio, it will not be replaced (before depletion).
Oil is irreplaceable, today, not because we don't have more powerful energy sources - nuclear power; else because we don't have more affordable sources of power- solar, wind. It is irreplaceable, because, as I pointed out in my answer above, the range of applications - in case of oil - is wide. If solar - the closest competitor as of today - can power as many equipments as crude - and it has to be cheaper too - it could replace oil.
Dear Fidelis,
oil can never play a role similar to gold - like something with limited supply, a potential numeraire in exchange system (before 1960s dollar was linked to gold).
While oil plays a very high role in current consumption (it is still a key fuel for transportation) its role differs a lot from gold. First, gold is not consumed and its total stock is constant, while extracted stock grows over time slightly, while oil is consumed and thus its global stock on the Earth declines. (Do not mix with discovered oil, I am talking about the sum of all existing - both discovered and not yet discovered). The second problem is that in the long run oil has to be substituted with renewable energy. The third is that oil price is so volatile that it cannot become a numeraire (unit of universal value in microeconomics).
Dear Colleagues
Thank you all for your wonderful contributions. I have a balance projection on the subject in question.
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