June 28, 2006

World Oil Reserves

I've written about oil prices and world supplies on my blog in the past*, and I found the following information rather interesting. This also comes from the current issue of The Economist.

The world had 1.2 trillion barrels of proven oil reserves at the end of 2005, according to BP. If overall production continues at last year's rate, known oil will last for 41 years. But it will run out more slowly in some countries than in others. At today's extraction rate, Saudi Arabia's reserves, which account for more than a fifth of the world total, will last for 66 years.

As you can see, at last year's production level, the remaining oil that is currently known to exist within U.S. borders will be completely pumped dry in 12 years - 2018. Mexico's reserves will be gone in 10 years (2016).

So, bought that electric car yet?


* See Oil: America's Smack and, more recently, How Much Oil Does America Import?


George Carty said...

Its not quite as dire as you make out. "Oil reserves" means "known oil supplies which may be profitably extracted", not "total amount of oil present at all". As oil becomes scarcer, its price increases, and new oil reserves come into play, which had previously been uneconomic to extract.

JD said...

George wrote: "Its not quite as dire as you make out."

It is and it isn't. :)

"'Oil reserves' means 'known oil supplies which may be profitably extracted', not 'total amount of oil present at all'."

Actually, the oil reserves in question are the "proven oil reserves," of which there is a reasonable certainty as to the size of the reserves. Of course, proven oil reserves within a country frequently increase in size over time as new reserves are discovered. I would agree that this number also includes those reserves that may be profitably extracted from, which is one reason why Canada's proven oil reserves estimates are all over the place (one estimate places the number at slightly less than 5 billion barrels, another places it nearer just under 179 billion barrels; the latter includes oil sands that may or may not be profitably extracted from). So we don't really know how much oil there is available in the world (and probably will never know the actual amount).

"As oil becomes scarcer, its price increases, and new oil reserves come into play, which had previously been uneconomic to extract."

Yes, all this will come into play; I'd also expect to see more exploration to find new reserves, a hoarding of oil by various countries, and a slowing down of production as oil supplies dwindle in certain countries. We won't reach a "Mad Max/Road Warrior" scenario anytime soon, but the fact that, out of 23 oil producing countries, 11 could run out of their own oil supplies within the next 21 years (within my lifetime, insha'allah), plus a voracious American appetite for oil, suggests to me that there needs to be a strong push toward alternative sources of energy within the next few decades.

Anonymous said...

We also have to keep in mind that the formula is
Proved Reserves/Current Rates of Use
While more petroleum comes on line because of exploration and the effect of increased prices making subeconomic reserves economically viable to extract, the rate of use increases as well.

Anonymous said...

....The comsumption of oil, by any measurement (pr. capita, overall money spent (inflation-corrected or not) or even flat out amount used pr unit of goods)is increasing exponentially. How you count it changes how aggressive the increase, but the overall picture is similar by all accounts: comsumption of a finite resource is expected to be infinite.
The only issue left on the table is When will comsumption overpower production.
Adress this issue.
forget about how much comes from where - forget about the flow. If every car in the world started producing oil for every mile driven, how far would a car have to go to earn back the amount of oil expended to make it go at all?
With 7 gallons of oil in a single tire, not counting the oil expended in heating, cooling, transporting etc., do you really think gas prices are the issue?

This is not rocket science.