Oil could run dry long before substitutes can take over

Posted by Emma Woollacott

Unless R&D is stepped up dramatically, stock market expectations indicate that global oil supplies will run out 90 years before replacement technologies are ready.

A new University of California, Davis, study is based on the theory that long-term investors are good predictors of whether and when new energy technologies will become commonplace.

"Our results suggest it will take a long time before renewable replacement fuels can be self-sustaining, at least from a market perspective," said study author Debbie Niemeier.

The team used market capitalizations, based on stock share prices, and dividends of publicly owned oil companies and alternative-energy companies. Other analysts have previously used similar equations to predict events in finance, politics and sports.

"Sophisticated investors tend to put considerable effort into collecting, processing and understanding information relevant to the future cash flows paid by securities," said Malyshkina.

"As a result, market forecasts of future events, representing consensus predictions of a large number of investors, tend to be relatively accurate.”

Niemeier said her findings indicate that current renewable-fuel targets are not ambitious enough to prevent harm to society, economic development and natural ecosystems.

“We need stronger policy impetus to push the development of these alternative replacement technologies along,” she said.