Current World Oil Situation
This graphic is worth careful study.[1] It shows oil discoveries and oil consumption since 1930 to the
present. The black line shows oil consumption. Notice the peak in consumption
in 1979 corresponding to the first oil crisis. The subsequent 5 year decline in oil consumption is
attributed to more fuel efficient transportation and a slowing world economy. The blue
bars show oil discoveries. Kuwait's big oil field, Burgan, was discovered in the late 30s. The discovery of Ghawar, the world's largest oil field, is
visible in 1948. Note that the discovery rate peaked around 1966. Note also that
consumption exceeds discoveries every year since 1984. None of this is controversial--it is
only history.
Connecting the Dots
What happens after 2005 is extrapolation and speculation. The IEA
(International Energy Agency) projects at least a 50% increase in the demand for oil by
2030. (a demand increase is not the same as a consumption increase.) The green dots have been added to the original
graphic to show a 50% increase in demand by 2030. The growth in consumption was 3% in
2004, but yearly increases of only 1.6% would lead to a 50% growth in consumption by 2030. China and India are both booming and
are both rapidly increasing their consumption of oil.
The yellow bars illustrate a guess about yet-to-find oil. The discovery
rate declines 5% per year. The red dots have been
added to show the same decline running backward in time. The yellow bars represent an
optimistic guess about the future discovery rate because the past discovery rate was always less.
The Conclusion
Oil discovered 40 years ago is the basis of current oil production. The
search for oil continues but projected oil discoveries will contribute little to projected oil production in 2030.
The declining rate of oil discoveries makes it painfully obvious--most of the oil has
already been discovered. The technology for finding oil has improved greatly since the
major discoveries, yet little oil has been found in recent years. It is difficult to avoid the
conclusion--most of the oil has been found. Oil production has
outrun oil discoveries.
There is a growing gap between
discoveries and production.
World oil production is running flat out. Only the Saudis claim to have
the ability to produce more though some dispute this. It is not a simple matter of pumping faster. Oil fields
can be permanently damaged by attempting to produce too
fast.
Soon there will be a gap between production and demand.
It Gets Worse
According to BP (British Petroleum) [2]
world oil reserves stand at 1150 billion barrels. At present (2005) yearly world oil
production stands at 30 billion barrels. The world R/P (reserves to production) ratio is 38
years. (This is not to be construed to mean that oil production can be maintained for 38
years.) Africa and the Middle East have 71% of the total according to BP. The rest is
scattered around the world. North America has 5.5%. South America has 8.9%. China, Indonesia,
Siberia and Australia have some too.
The United States consumes 25% of the world's oil while it produces only
9.2%. The R/P ratio for the US is 11.3 years and it is 12.2 years for all of North America.
That means Mexico and Canada don't have much oil either. The R/P ratios for the Middle East and Africa are 88 years and 33 years,
respectively. That means the United States will be increasingly dependent on oil
imported from those places. It is impossible to consider oil independence in
light of these numbers.
The majority of the world's oil comes from old oil fields. Kuwait, a
small country, still supplies 3% of the world's oil from a 70 year old field. Ghawar, a 57
year old oil field, still supplies 5% of the world's oil. The North Sea
(discovered in 1963) is in steep decline. Alaska's Prudhoe Bay (discovered in 1968) is now a
trickle.
Oil varies greatly in quality. Some oil is so light and sweet (low in
sulfur) it can be pumped directly into the fuel tank of a Diesel truck. Some oil is more like
tar and it may contain sulfur. It's hard to transport and natural gas may be needed to
refine it into useful fuel. The oil from Manifa, a large oil field in Iran, is an
extreme example. It contains so much sulfur and vanadium it can't be refined using
today's technology. The average quality of oil
is declining because the best quality was produced first. The remaining oil will be expensive and difficult to
refine and transport.
Oil varies greatly in accessibility. It is convenient to access Kuwaiti oil.
It is possible to see oil tankers in the Persian Gulf from Kuwaiti oil wells. It is
inconvenient to access oil from the north slope of Alaska. It was necessary to build an 800 mile pipeline over mountains and permafrost to reach
the oil in Prudhoe Bay. Oil drilling platforms can reach oil in mile
deep water but only at great expense in money terms and in energy terms. There is oil in
the arctic but oil drilling platforms will have to deal with ice and deep water to
access it. Of course, the easy-to-access oil was
produced first.
[1] http://www.peakoil.ie/peakoil
 [2] http://www.bp.com/ British
Petroleum (BP) publishes the annual Statistical Review of
World Energy. The Review is widely
referenced because it is convenient, complete, colorful and very well
done. However, the data do not reflect the company's own
assessments--it is simply republished data from other sources. One major source
is the Oil & Gas Journal, but its sources are suspect as well. They get their
numbers by simply asking government officials. The numbers
for the United States are probably reliable because the oil companies are regulated by
the SEC (Securities and Exchange Commission.) The numbers for Norway and Britain are
probably reliable as well. However, the numbers for the Middle Eastern countries are
whatever the countries say they are. They treat oil reserve numbers as state secrets. The bad news is
that the Middle Eastern countries have reasons to overstate their reserves. Planetforlife takes these numbers at face value mainly for convenience.
[3]
http://www.defenselink.mil/specials/secdef_histories/bios/schlesinger.htm
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