Are We Running Out of Oil?
Wednesday, January 29, 2003
by David Deming
Table of Contents
Reserves versus Resources
Nonexperts, including some in the media, persistently predict oil shortage because they misunderstand petroleum terminology. Oil geologists speak of both reserves and resources.
- Reserves are the portion of identified resources that can be economically extracted and exploited using current technology.
- Resources include all fuels, both identified and unknown, and constitute the world's endowment of fossil fuels.
Oil reserves are analogous to food stocks in a pantry. If a household divides its pantry stores by the daily food consumption rate, the same conclusion is always reached: the family will starve to death in a few weeks. Famine never occurs because the family periodically restocks the pantry.
Similarly, if oil reserves are divided by current production rates, exhaustion appears imminent. However, petroleum reserves are continually increased by ongoing exploration and development of resources. For 80 years, oil reserves in the United States have been equal to a 10- to 14-year supply at current rates of development.15 If they had not been continually replenished, we would have run out of oil by 1930.