Energy Supply

Are we running out of oil or out of atmosphere?

Ever since the beginning of the 21st century, the world has grown increasingly reliant on oil. Currently, worldwide consumption is 32 billion barrels annually, with the United States consuming a quarter of the world’s total supply. Over the years, we have observed the United States reaching peak oil production in the 1970’s, leading to rising anxieties about the amount of global oil supplies that remain and many proponents arguing that the world would soon reach a point of maximum oil production.1

In the face of such a pressing situation, many people have attempted to find out exactly how big the world’s oil reserves are. However, the current estimates are uncertain. The world’s oil reserves are typically classified into three categories: Proven reserves, probably reserves and ultimately recoverable reserves. It is tricky to determine the world’s proven reserve, which is defined as inventory that is profitable at current market prices and extractable with existing technologies. Due to the uncertainty and wide fluctuation in oil prices, it is difficult to determine the amount of proven reserves which would be profitably sold at current market prices as many of the world’s oil reserves are often located in difficult to reach areas deep under the ocean bed or in the form of tar sands which are expensive to extract and would be unprofitable to extract if oil prices drop to below 60 dollars a barrel. Current best estimates for the total amount of oil reserves range from three to six trillion barrels of oil equivalent based on current oil recovery technologies, which include unconventional resources such as bitumen in oil sands.2 Despite arguments from opponents who claim that technological advancement would lead to more fuel efficient cars and increasingly economical methods of extracting oil from previously difficult to reach areas, it would be a mistake to assume that the world’s oil supplies would continue...