Economics of Oil and Gas The oil industry has found and produced expensive and difficult oil from new provinces at a maximum rate possible. This has left abundant, easy and cheap oil in the hands of IOPEC countries in the Middle East. The latter were forced to a swing role hence making up the difference between the world demand and what can be produced by other countries. This was contrary to the normal economic practice hence concealing gradual impact of growing shortages, depletion as well as the rising cost. The depletion of oil refers to a decline in the production of oil of a well, oil fuel or even a geographical area. The predictions of rates of oil production by Hubbert peak theory are made on the basis of prior rates of discovery as well as the anticipated rates of production. Therefore according to this theory once the peak of production is passed the rates of production will enter an exponential decline (Campbell & Laherrere,1998).

This is because eventually the world will ruin out of oil.it takes over 10 million years, particular geological processes as well as a mass extinction of dinosaurs and other ancient creatures for crude oil to be created. This therefore makes oil to be classified under nonrenewable resources. However it is difficult to state the exact time when we will run out of oil since we are not able to look into the mantle of the Earth to ascertain how much oil is left there. This means that once the peak of production is reached no matter how many new discoveries are made they would not be able to keep up with the depletion (Jamail, 2011). The truth of the matter is the depletion oil never stops. It begins as soon an oil well starts production and continues for 24 hours a day, and 365 days in a year. Furthermore it is not the news that there are discoveries in oil all…