STEWART SPENCE WAS a young hotelier in Aberdeen in 1971 when he first realised what an oil rush meant. His hotel, the Commodore, was the only one in the Scottish city with en-suite bathrooms. One day an American oil executive strode in, wearing denims, cowboy boots and a stetson. Once assured that the bedrooms had private facilities, he booked 20 rooms for six months and paid upfront by banker’s draft. The American, boss of an oil-services company called Global Marine, was ferrying three oil rigs from the Gulf of Mexico to Aberdeen. Thus began Scotland’s North Sea oil boom. Steak houses, cigars and words like roughneck and roustabout took hold. Texans famously drank Dom Pérignon champagne out of pint mugs. They lived the high life until oil prices crashed in 1986. Then they disappeared almost as swiftly as they had come, says Mr Spence.

Since those days oil has brought both boom and bust to Aberdeen, but never before the sense of despondency that grips the city today. In 2012 it had more multi-millionaires per 100,000 people than London and the world’s busiest heliport, taking workers to and from the rigs. But the oil-price crash in 2014 drove home the fact that after almost half a century of exploitation, many of Aberdeen’s offshore fields have become too expensive to be sustainable. The number of jobs has plummeted, and some oil producers are on the brink of bankruptcy.

As the world enters what could be the twilight of the oil age, some wonder whether Aberdeen’s travails could be a harbinger of things to come in oil-producing regions across the world. Mr Spence thinks so. He still runs the smartest hotel in Aberdeen and is about to install a charging station for electric vehicles.

Not so fast, say many oil-industry veterans. They accept that high-cost oil regions like Scotland’s North Sea, Canada’s oil sands and the Russian Arctic may be in trouble, but expect at least one more oil boom, born from the ashes of today’s bust, because there has been so little investment in the past two years to open up new sources of supply. Within the next couple of years, they think the market will once again swing from glut to shortage. The biggest beneficiaries will be producers in places with low-cost, abundant oil such as the Middle East, America’s Permian basin, Brazil’s pre-salt fields and parts of west Africa. But although those regions may see a boom in investment, it would be short-lived, because long-term demand is falling and the market could quickly become oversupplied.

After dark

When it comes, what might a terminal decline in the use of oil mean for the industry, governments and the world at large? The biggest turmoil would be felt in oil-dependent developing countries. As Jason Bordoff, of Columbia University’s Centre on Global Energy Policy, notes, the social stresses now evident in budget-strapped petrostates such as Venezuela and Nigeria are a hint of things to come. Gulf countries would accelerate their efforts to diversify their economies away from oil, as Saudi Arabia is already doing. America might rethink its “oil-for-security” geopolitical bargain with that country. Lower oil revenues could increase instability in places like Iraq.

Oil companies, for their part, will have to explore new lines of business. The North Sea provides a glimpse of some of the opportunities that lie ahead. Near Aberdeen, firms such as Royal Dutch Shell are decommissioning parts of the spectacular network of rigs and pipelines installed in the 1970s. Andrew McCallum, an adviser to Britain’s regulator, the Oil and Gas Authority, says oil companies could deploy their decommissioning skills on projects around the world.

Look to Norway

Statoil, the Norwegian state oil company, has set an example of what oil companies might do in future. Earlier this year it acquired a lease to build the world’s largest floating wind farm 15 miles off the coast of Peterhead, north of Aberdeen. Each of its five 6MW turbines will be tethered to the seabed on a floating steel base, enabling it to operate in deeper water than a conventional turbine embedded into the sea floor. That will give it access to stronger winds farther offshore, making it cheaper to produce electricity.

Back in Norway, Statoil also operates two projects to store carbon dioxide under water, in some of the most advanced examples of a technology seen as key to removing greenhouse gases from the atmosphere: carbon capture and storage (CCS). This is costly and still in its infancy, and governments have supported it only erratically. In 2015 a mere 28m tonnes of CO2 was stored that way. To help meet the 2ºC limit, the IEA says the world needs to store a whopping 4bn tonnes a year by 2040.

Biofuels are another way to diversify. At the North Sea port of Rotterdam, Neste, a Finnish refiner, ships in waste fats from the world’s slaughterhouses and converts them into biodiesel for the haulage and aviation industry. It costs more than regular diesel, but under EU rules member countries’ fuel mix must include 10% biofuels by 2020. Neste’s boss, Matti Lievonen, recalls that in 2012 nine-tenths of his company’s operating profit came from refining fossil fuels, whereas now renewables account for 40%.

Not all oil companies want to be innovators. Many plan to develop more gas, but also insist that the world’s demand for oil as feedstock for petrochemicals will keep them in business even if demand from cars wanes. The IEA predicts that petrochemicals will raise demand for oil by almost 6m b/d in the next 25 years. Oil companies are putting pressure on governments to impose carbon taxes, believing them to be the best way to kill off coal and boost natural gas, at least until renewable energy and batteries have come of age. So far governments have shown remarkably little appetite for such taxes. The IEA calculated that carbon markets covered only 11% of global energy-related emissions in 2014. In contrast, 13% of emissions were linked to fossil-fuel use supported by consumption subsidies.

Transport fuels are more widely taxed, but at vastly different rates, ranging from high in Europe to low in America and China. Experts say that in America it is easier to regulate fuel consumption via vehicle-efficiency standards, which consumers notice much less than fuel taxes.

The crucial, and underappreciated, players in the future of oil are consumers. Their choices, at least as much as those of producers and governments, will determine its ultimate fate, because oil fuels the industries that make goods for them, the trucks that deliver those goods, the cars they drive and the plastic objects that clutter their homes.

This special report started by recalling how the horse was displaced by the car. Urban planners failed to find ways to reduce the horse-manure problem. Governments paved roads, put up traffic signs and introduced legislation that allowed the motor car to establish itself. Yet it was the allure of the Model T for millions of consumers that finally drove the horse off the road.

Similarly, oil companies may turn their attention to alternative fuels, governments may tinker with fuel taxes and congestion charges, battery costs may come down with a bump and the electricity grid may be converted to run on sun and wind. But none of these developments alone will end the oil era. Only when entrepreneurs can capture the public’s imagination with new vehicles that transform the whole travel experience, rather than just change the fuel, will the petrol engine run out of road.

This could happen with electric self-driving cars, which may eventually become not just four-wheeled travel pods but mobile offices, hotels and entertainment centres, running noiselessly through city streets day and night. Or it could be some other futuristic innovation. A new play in London, “Oil”, predicts that the hydrocarbon age will end with the Chinese mining helium-3 on the Moon to fuel nuclear-powered cars and homes on Earth. Whatever your particular fantasy, there are bound to be more oil wars and oil shocks. But it will be when the internal-combustion engine eventually loses its remarkable grip on the world’s roads that the age of oil will come to a screeching halt.