Oil for the Ages
January 29, 2003
Predictions oil supplies will dry up within a few years have been common over the last 150 years. The world had produced a total of 900 billion barrels of oil by 2000 -- yet estimates of the total amount of oil resources still in the ground grew throughout the 20th century. For example:
- In May 1920, the U.S. Geological Survey announced that the world's total endowment of oil amounted to 60 billion barrels. (See Figure III.)
- In 1950, geologists estimated the world's total oil endowment at around 600 billion barrels.
- From 1970 through 1990, their estimates increased to between 1,500 and 2,000 billion barrels.
- In 1994, the U.S. Geological Survey raised the estimate to 2,400 billion barrels, and their most recent estimate (2000) was of a 3,000-billion-barrel endowment.
This is possible because the world's oil endowment is much larger than its oil reserves -- which are identified resources that can be economically extracted and refined using current technology.
As new technologies increase the amount of recoverable oil, and market prices encourage new exploration and development, the world's total endowment goes up.
But the world's oil endowment does not include unconventional oil resources. Oil shales, for example, could easily be as large as 14,000 billion barrels -- more than 500 years of oil supply at 2000 production rates. Nor do they include other fossil fuels, such as natural gas and coal.
Unconventional oil resources are more expensive to extract and produce, but we can expect production costs to drop with time as improved technologies increase efficiency.
Source: David Deming, "Are We Running Out of Oil?" Policy Backgrounder No. 159, January 29, 2003.
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