FOSSIL FUEL OIL

Are we running out of fossil fuel oil? If we are running out, how much is left and how long will it last? Let’s get straight to the answers.

Crude oil is probably a finite, nonrenewable energy resource. We may be running out. But let’s look as some of the numbers before we decide whether or not we should panic.

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The United States Department of Energy has data on all energy reserves. If you want a compact, easy to handle number it looks like total known, proven fossil fuel oil reserves are estimated to be about 1,200,000,000,000 (one trillion two hundred billion) barrels. (A barrel of oil is 42 U.S. gallons.) You can link to D.O.E. Oil Reserves for the full report.

The D.O.E. also has figures on world fossil fuel oil production which are shown in this graph:

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World Crude Oil Production, 1973-2004 Million Barrels per Day

Those are daily numbers and they translate to about 25,500,000,000 (twenty five billion) barrels of fossil fuel oil a year being produced and consumed.

With proven fossil fuel oil reserves of about 1,200,000,000,000 (one trillion two hundred billion) barrels, that means that our current non renewable fossil fuel oil reserves will last about another 47 years. There are some problems with that estimate, though.

D.O.E. Oil Reserves , you will notice that the year end figure for 2004 is about 1.1 trillion, and the year end figure for 2005 (shown as January, 2006) is about 1.3 trillion.

Those figures indicate that although we consumed about 25 billion barrels of fossil fuel oil in 2005, proven world oil reserves actually grew by 200 billion barrels. So you could easily assume by that number that, rather than running out of oil, we are actually increasing world fossil fuel oil reserves. The problem with that assumption is that oil reserves don’t grow every year.

There have been a number of years when fossil fuel oil reserves have decreased. Oil reserves either increase or decrease depending on how many suspected oil fields prove to be usable reserves when they are tapped, and many don’t prove out. They also increase or decrease depending on how much oil exploration and drilling activity happens during a given year; and that is driven largely by world oil prices.

Relatively high fossil fuel oil prices induce more drilling and exploration. And relatively low oil prices reduce exploration and drilling. It would be easy to misunderstand this to be greed on the part of oil companies. But oil companies, like all companies, are driven by financial reality.

Fossil fuel oil exploration and drilling are horribly expensive propositions involving months and years of expensive, high tech exploration and billion dollar drilling rigs. If oil prices are too low, oil companies can’t afford to risk billions on a well that might not pay for the cost of bringing it into operation.

There are other factors that affect oil reserve estimates. During periods of economic recession oil consumption goes down. During periods of prolonged, mechanized warfare oil consumption goes up. Political upheaval in oil producing areas can temporarily reduce supplies and reduce consumption during any given year. These factors and many more affect consumption and exploration to the extent that long-term projections of fossil fuel oil reserves become something akin to science fiction; they are highly speculative.

That being said, there are some fairly safe assumptions we can make. In some years global fossil fuel oil reserves have increased, in others they have decreased. On average, oil reserves have grown annually. But according to the Hubbert Peak Oil Theory, the rate of new discovery and production will start decreasing soon.

Probably the most prominent theory regarding future oil production was put forth in 1956 by geophysicist Marion King Hubbert. The Hubbert Peak Oil Theory predicted that U.S. oil production would peak in about 1970 and world oil production around 2000. (Complete article from Wikipedia: Hubbert Peak Oil Theory )

And just to toss some more fuel on the fire (couldn’t resist the pun), you should also know that the Hubbert Peak Oil Theory also has it’s detractors as detailed in this article, also courtesy of the good folks at Wikipedia Encyclopedia.

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Few would deny that fossil fuels are finite and that alternative energy sources must be found in the future. Most critics of Hubbert's peak theory instead argue that the peak will not occur soon and that the form of the peak may be irregular and extended rather than a sharp logistic curve peak. Like any mathematical model, the accuracy of the prediction is limited by the accuracy of the inputs. If variables such as consumption are estimated incorrectly, then the formula will yield incorrect results.

In 1971, Hubbert used high and low estimates of global oil reserve data to predict that global oil production would peak between 1995 and 2000. This peak did not occur. However, it should be noted that other events that occurred after Hubbert's prediction may have delayed the peak, especially the 1973 energy crisis, in which a decreased supply of oil resulted in a shortage, and ultimately less consumption. The 1979 energy crisis and 1990 spike in the price of oil due to the Gulf War have had similar, albeit less dramatic effects on supply. On the demand side, recessions in the early 1980s and '90s have decreased the demand and consumption of oil. All of these effects would theoretically delay peak oil.

The implications of the model are controversial. Some petroleum economists, such as Michael Lynch, argue [1] that the Hubbert curve with a sharp peak is inapplicable globally due to the differences in oil reserves, political and military leverage, demand, and trade partnerships between countries and regions.

The United States Geological Survey estimates [2] that there are enough petroleum reserves to continue current production rates for 50 to 100 years. A year 2000 USGS study of world-wide oil reserves predicted a possible peak in oil production around the year 2037. That is countered by an important Saudi oil industry insider who says the American government's forecast for future oil supply is a "dangerous over-estimate."[3] Campbell argues that the USGS estimates are methodologically flawed. One problem, for example, is that OPEC countries overestimate their reserves to get higher oil quotas and to avoid internal critique. Population and economic growth may lead to increased energy consumption in the future.

Further, the USGS reserve estimate appears to owe as much to politics as to research. According to the Energy Information Administration of the United States Department of Energy, "estimates are based on non-technical considerations that support domestic supply growth to the levels necessary to meet projected demand levels. [emphasis added]" (Annual Energy Outlook 1998 With Projections to 2020).

Critics such as Leonardo Maugeri point out that Hubbert peak supporters such as Campbell previously predicted a peak in global oil production in both 1989 and 1995, based on oil production data available at that time. Maugeri claims that nearly all of the estimates do not take into account non-conventional oil even though the availability of these resources is huge and the costs of extraction, while still very high, are falling due to improved technology. (A drawback to this position is that heavy oil sources will never be as profitable as current light oil sources, both in production rates and energy gain.) Furthermore, he notes that the recovery rate from existing world oil fields has increased from about 22% in 1980 to 35% today due to new technology and predicts this trend will continue. According to Maugeri, the ratio between proven oil reserves and current production has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and reaching about 40 years in 2003. Also according to Maugeri, these improvements occurred even with low investment in new exploration and upgrading technology due to the low oil prices during the last 20 years. The current higher oil prices may well cause increased investment (Maugeri, 2004).

According to professor James H. L. Lawler, a modular plant, integrating several well proven technologies into a new system, could recover almost all the oil left from primary and secondary recovery, while at present economic recovery, only half of the oil or less is being recovered from a reservoir. [4] Thus, the world's reserves of oil could virtually double in a stroke. His process promises a recovery rate in excess of 95%, though consuming about 3% of total initial reserves for operating energy requirements. Therefore, massive additional amounts of oil could come from already known sites.

There are many other attempts to predict oil production. One example is that the global conventional oil production will peak somewhere between 2020 and 2050, but that the output is likely to increase at a substantially slower rate after 2020. A continued rapid increase in oil production requires an increased exploitation of non-conventional sources (Greene, 2003).

As of June 2005, OPEC has admitted that they will 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of the year. It is expected that the summer and winter of 2005 will bring oil prices to a new high; some would say this is a prime example of demand starting to outstrip supply. Others could blame it on various geopolitical forces in the regions where oil is produced. One other explanation for the rising oil prices is that it is a sign of too much paper money and not too little oil. In this view, dramatically higher prices of all commodities and U.S. real estate indicates rising inflation.

Courtesy of: "http://en.wikipedia.org/wiki/Critique_of_Hubberts_peak_theory"

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And the mixture of resource information continues in this assessment of global fossil fuel oil also furnished by our friends at Wikipedia:

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World Oil Resources

It has been estimated that there is a total of 2,390 billion barrels (380 km³) of crude oil on Earth, of which about 70% has been used so far. The World Energy Resources Program of the United States Geological Survey produces the official estimates of the world oil resources for the U.S. Federal Government. They estimate the remaining world oil reserves are about 1,000 billion barrels, and current estimates place the exhaustion of the remaining known reserves within the next 50 years. Other estimates of undiscovered reserves range widely from 275 to 1,469 billion barrels (44 to 234 km³). (It should be noted that one barrel equals 42 US gallons, or 158.97 litres.)

The Middle East has about 50% of the known remaining world oil reserve. The USGS estimates the total reserves are about three times the known amount.

There are margins of uncertainty concerning the actual size of proven oil reserves.[2] Presumably for political reasons, some nations have not allowed audits of the size of their fields. This is especially true of Middle East members of OPEC, as well as nations that belonged to the USSR. OPEC limits the amount of oil output a member nation can produce to a portion of the remaining reserves, giving an incentive to manipulate the data. For example, in 1985 Kuwait increased the estimated size of their oil fields by 50%, which allowed them to increase their output. Other member nations quickly followed suit. The Saudi national oil company controls the largest amount of proven oil reserves in the world.

Crude oil is a non-renewable resource. Some estimates, such as the USGS, predict that oil reserves will become economically unrecoverable by the 2050s. However, these numbers are open to debate as they include only reserves that are presently in development or considered economically recoverable. They do not include tar sands and bitumen, nor do they take into account possible coal-derived production, methane extraction from waste, the recycling of tires, or recycled plastics. Estimates also do not include any reserves in Antarctica, which is protected from exploration by environmental treaties. Although none of these sources are currently economical, they could be used to produce significant quantities of hydrocarbons in the future, and they may become important as crude oil production dwindles, or if new technology makes them easier to recover. Higher crude oil prices also make these sources more attractive; industry observers believe that sustained prices above $40/bbl will provide the incentive and return on investment to make previously undesirable oil deposits economically viable.

Courtesy of: http://en.wikipedia.org/wiki/Oil_resources _________________________________________________________________

By now I'm sure you see that there are no set answers concerning natural resource supplies. In doing the research for this section and others I came across endless debate, arguements, and counter-arguements. Still, there is useful data and a consensus of sorts, so let’s get back to the numbers at the top of this page.

Because oil exploration continues to develop new fossil fuel oil resources, the 37-year supply number needs to be readjusted upward. And because of the multitude of mitigating and aggravating circumstances, nobody is really sure just what the number is.

Currently, the U.S. Department of Energy places the life expectancy of global fossil fuel oil supplies at somewhere between fifty and one hundred years. Others would place the number lower. Though all the experts argue over the details, they agree on the eventual outcome. We will run out of fossil fuel oil.

For simplicity sake, let’s assume that fossil fuel oil supplies will last about another fifty years. But running the global fuel tank dry isn’t like running your car dry. When you run out of gas in your car you drive along without interruption, consuming fuel at a continuous, steady rate until the last drop goes down the carburetor (or fuel injector as the case may be). Then, suddenly, your engine stops. That’s not how the global fuel tank will run dry.

Oil wells don’t, as a rule, just run dry. They produce at one level when they first go into service. After a while the flow rate slows and water often starts showing up in the oil flow. After more oil is drawn from the well the flow reduces further. If there is water displacing the oil, the percentage of water continues to increase. Eventually oil production drops to a level where more money is spent pumping a barrel of oil out of the ground than oil prices will support.

The global fossil fuel oil tank will deplete in much the same manner as a single oil well. Long before production stops altogether it will slow, and it will become more and more costly to produce a barrel of oil. Supply disruptions and shortages will become common.

Experts agree that long before we run out of oil, a state of global economic chaos will result due to massive shortages. Estimates vary about when this process will start. Some say it may not start for another twenty-five years. Others suggest that it has already started. All of this will happen. It must happen - UNLESS we do something about it.

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