Oil: Are we running out?
Since there is a finite amount, they don't make any more, the answer has to be 'Yes'.
But, the question really should be "When are we running out of oil?"
That question is far more difficult to answer with any certainty.
It depends on:
- How much oil has been discovered
- How much will we discover in the future
- How much are we using
- How much will we be using
- Is the oil that we find accessible - we know its there, but can we get it.
How much oil has been discovered?
The current reserves of oil - this generally taken to be those quantities that geological and engineering information indicates that, with reasonable certainty, can be recovered in the future from known reservoirs under existing economic and operating conditions - were estimated at 1,317 billion barrels (January 2007).(This oil includes gas condensate and natural gas liquids as well as crude oil, and includes an official estimate of Canadian oil sands "under development".)
This is 24 billion barrels (about 2 percent) higher than the estimate for 2006. That was up 15 billion barrels on the year before. Of this about 65% is controlled by OPEC.
Why are the reserves going up, not down?
For several reasons:
Companies are constantly looking for more, and finding it.
Some of the reserves that were known, were not counted in the past, as the cost of recovering it was too high.
It may be that it was too deep, a relatively small volume or, as is the case with the Canadian Oil Sands, too expensive to refine. Now with the current crude oil price of US$ $80.00 per barrel, it would be economical to recover and therefore has been added to the reserve.
If the demand for crude oil were to come down next year, as a result of a slow-down in the global economy, or a switch to alternative fuels, then the price of crude would come down as well. As a result the recovery of some of the known reserves would no longer be economically viable and the reserves would no longer be included.
Where are we finding "new" oil?
Since 2000, the largest net increase in estimated proved
oil reserves has been made in Canada, with the addition
of 174 billion barrels of Canadian oil sands as a conventional reserve. Iranian oil reserves have increased by 46.6 billion barrels, or 52
percent, since 2000. Kazakhstan has had the third-largest increase,
24.6 billion barrels, since 2000.
Where are the reserves?
According to Oil & Gas Journal, 56 percent of the world’s total proven oil reserves are located in the Middle East (Figure 39).
Among the top 20 reserve holders in 2007, 11 are OPEC member countries. Together they account for 65 percent of the world’s total reserves.
On the other hand the largest declines in oil reserves between 2000 and 2007 were reported in Mexico (16.0 billion barrels), China (8.0 billion barrels), Norway (2.9 billion barrels), Australia (1.3 billion barrels), and the United Kingdom (1.3 billion barrels).
How much will we discover in the future?
We don't know.It will depend on the cost of oil vs the cost of exploration and refining. Also, can it compete with an alternative?
If the oil companies can make a profit, they will keep up exploration. There are vast areas in the oceans that are just impossible to drill for oil, using current technology.
How much are we using?
In 2005 the world was using 30.1 billion barrels per year. If we keep going the way we are, and assuming we can use all of the reserves and we don't find any more and don't increase our use, this would last for 43.75 years.How much will we be using in the future?
We don't know, but we can take a guess. Since 1965 oil consumption has steadily increased from 11.4 billion Barrels of oil per year to now 30.1 Billion (2.64 times). Developing countries like India and China increased their consumption over the same period from .09 to 0.90 (India = 10 times) and 0.08 to 2.55 (China = 31.86 times).On the other hand, developed countries are actively developing alternatives to crude oil, such as biodiesel and ethanol for transportation and wind and solar for electricity production. This may lead to a lessening of demand for crude in these countries. (see Alternative Energy )
Is the oil that we find accessible? - We know its there, but can we get it?
Why wouldn't we be able to get it?It may not be possible to get to because:
- It may be too deep. The days of sticking a spade in the ground and striking oil are over. Oil is now increasingly less accessible. Reserves are located deeper, or in deep oceans or in hard to get to locations. On the other hand, the technology of drilling has improved and we can now drill down to about 10 km.
Oil exploration companies have become very skilled at getting to some of the most difficult to get to reserves.
They can even drill "around a corner" accessing areas previous thought inaccessible - It may be too expensive. Deep water wells can cost over $US 100 million.
- The country that controls it won't allow the use of it because of ideological or environmental reasons.
- Extraction might be too difficult. Oil sands, as found in Canada, have only recently become economically viable because of the current high oil prices.
Are we running out of oil?
Not in the immediate future, but over the longer term the costs is likely to continue to rise.
We need to look for alternatives and in the meantime mandate the more efficient use of a precious, finite commodity.