Are We Running Out of Oil?

Policy Backgrounders | Environment

No. 159
Wednesday, January 29, 2003
by David Deming


Introduction

"Estimates of the world's oil reserves have risen faster than production."

Oil is a nonrenewable resource. Every gallon of petroleum burned today is unavailable for use by future generations. Over the past 150 years, geologists and other scientists often have predicted that our oil reserves would run dry within a few years. When oil prices rise for an extended period, the news media fill with dire warnings that a crisis is upon us. Environmentalists argue that governments must develop new energy technologies that do not rely on fossil fuels. The facts contradict these harbingers of doom:

  • World oil production continued to increase through the end of the 20th century.
  • Prices of gasoline and other petroleum products, adjusted for inflation, are lower than they have been for most of the last 150 years.
  • Estimates of the world's total endowment of oil have increased faster than oil has been taken from the ground.

How is this possible? We have not run out of oil because new technologies increase the amount of recoverable oil, and market prices - which signal scarcity - encourage new exploration and development. Rather than ending, the Oil Age has barely begun.


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