Fossil Fuel Reserves

Relevance

There is great debate on how long oil reserves will last with the constantly increasing demand for energy. If the demand continues to increase, and the supply of oil decreases, prices will increase accordingly. This increase in price will affect the consumers’ willingness to switch to alternative fuel sources and reduce CO2 emissions. In addition, there will be greater incentive for business to invest in alternative fuels and this in effect would benefit the environment. It is interesting to question whether it would be good to use all of the planet’s remaining oil reserves. On one hand, it will increase CO2 emissions which the pessimists assume would have a drastic effect on the climate, while the optimists believe the heating will be less than many expect. On the other hand, if the price gets high enough, there is more of an incentive to switch to other more sustainable energy sources. The question really becomes how much oil there really is, and how long will it be before the world is ready to change.

Optimist

The optimist would believe that there is not very much oil left in the reserves, that we have reached the peak of oil production, and that prices will rise high enough that consumers will be willing to invest in more environmentally-friendly sources of renewable energy. There is a lot of evidence that oil production has peaked and that there oil reserves are less than many believe.

The BBC reports that the growth in demand was originally thought by economists to be 2.4%, or 484,000 barrels per day for the United Kingdom. Now reports lead us to believe that is actually significantly higher at 697,000 barrels per day and growing. The difference in oil demand comes from the data from foreign countries; while the US data is believe to be very accurate. The majority of oil remains in the Middle East, in countries like Iran and Iraq, with very volatile governments that cause prices to be high. The data on oil demand growth might a bit inaccurate, but the data on the size of the oil reserves varies greatly.

In the 80’s many countries falsely reported their oil reserves in order to loosen restriction on the amount of oil they could produce. In 2005 OPEC reported that they were producing 28 million barrels per day. Dr. Michael Smith, of the Energy Files, believes that world oil consumption could be as high as 120 million barrels per day, and that world production would not be able to keep up. The US Energy Information Administration has similar predictions with consumption increasing to 103 million barrels per day in 2015.

As new oil reserves have become harder to find, the cost of developing new sources of oil has grown 15% since 2000. The Cambridge Energy Research Associates (CERA) predicts that oil consumption could exceed production in only 2010, two years from now. It is also important to note that OPEC countries don’t allow external audits of their oil reserves so no one really knows how much they actually have.

As it can be seen currently, gas prices in the US have already risen dramatically and have sparked investment in hybrid cars that use less fuel. Last year, 353,000 hybrids were sold in the US.

Pessimist

Though most of the information indicates that the oil supply will be exhausted much sooner than previously believed due to the increase demand in developing countries like India and China, there are still some that argue we have not reached peak production yet.

There are many technological breakthroughs that are allowing companies to reach new oil. In the 1970’s, the deepest wells were dug under 600 feet of oil. Now, Chevron has a well in the Gulf of Mexico that draws oil from 10,000 feet below the surface. In addition, CERA reports that “digital oil fields” could boost the oil supply by 125 billion barrels. If Saudi Arabia is reporting their reserves correctly (they don’t allow external audits) they could have as many as 236 billion barrels underneath the desert. It is possible for Canada to extract another 170 billion barrels of oil out of the so-called “oil sands,” but the process would be very expensive and requires large amounts of water and natural gas.

Representatives for British Petroleum reported in 2004 that they believe oil supplies could late for over 40 years. The 2004 estimates of oil reserves were at 1.15 trillion barrels of oil, which was 10% higher then what was reported in 2002. It is interesting to note that in 2003 oil prices rose to a record $28.83 per barrel while they currently exist at over $100 per barrel.

References

How much oil do we really have?

Has oil production peaked?

World oil and gas resrves still growing

Optimist Pessimist Debate | Population | CO2 Emission | Fossil Fuel Reserves | Renewable Energy | Free Trade | Agriculture