THE OIL & GAS
The Oil Problem, The Production
Peak, Oil Discovery in New Fields, Increased
Recovery, Significance of Peak, Oil
The global production
of conventional oil will soon reach a peak, and subsequently
decline, due to resource limits. This peak in conventional oil production
will have severe economic consequences.
As the production
of conventional oil declines, the world will increasingly use oil from
non-conventional sources. Already, small amounts of such oil are used,
and there are very large quantities in the world, but, by and large,
these oils are more expensive than conventional oil, and the global
economy will suffer as greater proportions are used.
the decline rate of conventional oil will be fairly rapid, about a 3%
fall each year, and present calculations indicate that it is unlikely
that non-conventional sources can come on-stream fast enough to offset
conventional’s decline. In this case, if demand does not fall
in parallel, severe world oil shortages are inevitable.
Oil production from
a region reaches peak, and starts to decline, once falling output from
the large, early fields cannot be replaced by production from smaller,
ields coming on stream. This is illustrated in a simple way by
the following Figure.
Model of Oil Depletion
50 countries are already past their resource-limited oil production
peak. These countries include the USA (in 1971), Indonesia (1977), the
Former Soviet Union (the ‘economic’ peak in 1987 disguising
the resource mid-point), and the UK (in 1999).1 Production curves for
the UK and US, below, illustrate the mechanism of peaking more explicitly:
Oil Production and Consumption
UK Oil Production
UK ‘Brown Book’ data
As can be seen from
all three graphs above, production peaks when about half the recoverable
oil resource has been used. It is this simple fact that makes reliance
on “40 years of oil reserves, 60 years of gas” a dangerous
nonsense if one is concerned about availability of supply. The physics
of reservoir flow behaviour, and of reservoir size distribution, force
production from a region to pe
ak, and then decline, from about the half-way
For example, look
again at the ‘All hydrocarbons’ graph in Summary.
The 40 years of oil reserves are on the graph:
they are in the declining portion of conventional oil, past peak. The
‘R/P’ ratio tells us about oil that has been found, but
gives no warning of the date of impending
Turning now to countries
that are close to peak; there are about 20 of these, including major
producers such as Mexico, China and Norway.2
A further 25 countries
are still some years from their resource-limited oil peak. But of these,
the significant oil producing countries, except Kazakhstan, are all
members of OPEC. The resource-limited peak dates of these major producers
are approximately as follows: Saudi Arabia: 2015, Iraq: 2020, Iran:
2010, Kazakhstan: 2020, Kuwait: 2015, Libya: 2005, Nigeria: 2015, UAE:
, Venezuela 2020.
in New Fields
The near-term peak
in the global conventional oil production is driven the global decline
in conventional oil discoveries in new fields that has been a fact of
petroleum exploration for over 35 years.
This is shown in
the Figure below:
Discovery of Petroleum Liquids
Conventional Oil plus NGLs)
Shows Annual discovery data, and Cumulative discovery.
(Revisions backdated to original field discovery date.)
Source: F. Harper (Manager, Reserves & Resources, BP),
on Resources in the 21st Century,
AAPG Confr., 'Oil & Gas in the 21st Century', Sept. 1999, UK.
As the Figure shows,
global discovery of petroleum liquids in new fields peaked in the mid-1960’s
and has been in decline since. Global oil discovery
in new fields is now running at around
10 Gb/year, less than half the consumption rate. As the graph
shows, the likely ‘maximum discovery’, at least within any
reasonable time-scale, is about 2250 Gb.
About 1950 Gb of
oil plus natural gas liquids (NGLs) has been found so far. Of this,
about 950 Gb has been used, leaving 1000 Gb or so as industry-data (proved
+ probable) reserves.
A simple mid-point
peaking (i.e. logistic curve) calculation of production thus indicates
that global production of (oil + NGLs) will peak when about 1125 Gb
has been used, i.e., around the year 2010 on present consumption rates.
(Note that this is an approximate global aggregate calculation to illustr
the current situation; more detailed calculations are reported under
Note also that of
the 2250 Gb 'discovery-trend' figure, about 250 Gb is natural gas liquids.
So the original endowment of global conventional oil, based on discovery-trend
data, is about 2000 Gb.
The above figure
shows falling discovery of new fields, but what about increased recovery
in existing fields?
This is one of the
most contentious topics in oil depletion. For ‘normal’ oil
(i.e., excluding tar sands, etc.), globally an average of only about
40% (volume-weighted) of the oil in-place is recovered, though this
average hides a wide range of recovery factors in individual fields.
Thus the total amount of ‘normal’ oil in-place is about
5,000 Gb. Hence increasing the global average recovery factor by about
½% per year could supply all of current
Is degree of recovery
improvement actually occurring?
maintain that it is, and point to changes in public-domain proved reserves
data to support their case. Unfortunately, the public domain proved
reserves data are too inaccurate for this purpose (see Oil
Mythology, below), and we must turn to other data sources.
The key industry
data set, that from IHS Energy/Petroconsultants, is held on a ‘current
basis’; i.e. current estimates of field size are entered against
the original date of field discovery, so this gives no direct help.
Attempts to look back at the database history give partial answers,
but run into problems of changes in definition and coverage which need
further of work to fully unravel.
So, we can look
at two other places: the estimates over time of the recoverable global
resource; and at the experience of recovery enhancement technology applied
o specific regions.
The first source
of information seems fairly clear: except for some ‘data outliers’,
(and the recent USGS (2000) world assessment; which needs especial treatment,
The Views of Others),
estimates of the world’s original endowment of recoverable ‘normal’
oil have stayed fairly static at about 2,000 Gb for over 40 years. This
suggests that the ‘March of Technology’ is having little
influence on global recovery.
And if, secondly,
we look at specific instances of recovery improvement, the picture here
is also really of not much change. The IEA and others mislead themselves
with spurious data on Alaska and the North Sea (see The
Views of Others), but close examination shows that once secondary
recovery is in place, trying to raise the recovery factor beyond an
additional 5% or 10%, except for particular fields, is difficult. Crucially,
tertiary recovery, historically, has had essentially no effe
ct on the
peaking dates of countries that are now past peak.
Certainly the potential
to raise recovery factors is very large, particularly in some Middle
East countries where adequate output from existing fields, (and no 10¢
tax dollars), has discouraged such investments. And no-one knows what
recovery factors might be achievable in 50 or 100 years’ time.
But as far as impact on the conventional oil peak dates goes, the effects
of enhancing recovery are small.3 This is an area, however, where more
research would be useful.
If we are finding
new oil at a rate well below the consumption level, and the recovery
factors are not improving by much (see above), then the near-term peak
in conventional oil becomes inevitable. Here we look at the significance
of three such oil peaks, one past and two to come; and also at the global
peaks in the production of conventional gas, and in all-hydrocarbons.
The world already knows something of what happens when oil goes past
In the late 1960s,
nearly all the world’s oil came from the US, OPEC and Russia.
With Russian oil supply dedicated largely to the Communist bloc, the
decline in US production in 1971 left OPEC as the only supplier with
spare capacity. Subsequent political and economic disruptions resulted
in the oil shocks of the 1970s.
rose in other regions, including Mexico, Alaska, the North Sea and China
(all found before the shocks), and OPEC’s ability to set the market
But now the world
faces new, and far more serious, limits to oil production.
The first of these is the peak in the global production of non-OPEC
conventional oil. Though not yet widely recognised, the initial effects
of this peak have already occurred.
oil is defined narrowly (to exclude deepwater and polar oil, and NGLs)
the peak in the global production of conventional oil outside of the
main five Middle East producers is already past (in 1997).
If a wider definition
is used (all non very-heavy oils) the peak is just a few years in the
future; one recent estimate out of Houston puts it at 2002 or 2003.
But whether technically past or not, it was the peak’s effect
in increasing the difficulty of producing oil outside OPEC that permitted
OPEC quotas to stick. The latter raised the oil price from $10/bbl to
$30/bbl; caused the ‘Fuel protests’ across Europe in the
Autumn of 2000; and was one cause the current global economic slowdown.
Topics: Economic Aspects.)
of the non-OPEC peak can be seen in the following Figure.
Distribution of Conventional Oil
Shows oil that has been consumed (dark shading), and industry data
for (proved + probable) reserves (light colour). Excludes yet-to-
find. As the latter is fairly small (at least in the medium term) oil
production from a region declines when the ‘clocks’ on this
tick round to about ‘6 o’clock’. Source:
F. Harper, op. cit.
The Figure shows
- North America as a region has now consumed about three-quarters of
its original endowment of conventional oil. US production peaked in
1971 and has been in decline since, despite large finds in Alaska and
deepwater Gulf of Mexico; Canadian conventional oil output is well past
peak; Mexico is not far from peak.
- The current resource-limited peak in UK oil production reflects the
for Europe as a whole, which is now in decline.
- Russia too is past its resource mid-point, though just what level
might be reached in the next few years is still uncertain, due to the
major production fall in 1990 from economic collapse, and subsequent
- The Asia-Pacific region is near, or at, its oil production peak. China’s
oil peak is perhaps few years away (some analysts have it as already
past), and China is now a net importer with imports growing rapidly;
India is past its oil peak, and also has imports that are growing.
- Except for the Middle East, all regions of the world are close to,
or past, their resource-limited conventional oil peak.
The timing of the
non-OPEC peak (if defined as all non-heavies) depends largely on the
balance between forthcoming production from the deep offshore, recovery
in Russia, the new fields of the Caspian, and NGL production, versus
generally falling production elsewhere. But the non-OPEC decline in
conventional oil is soon, and inevitable; driven by the decline of the
early giants that have served Humankind well for so long; in the case
large early fields, for over a hundred years.4
world conventional oil peak
As non-OPEC oil production declines, the spotlight turns to OPEC production.5
countries currently have little spare operational capacity, and what
there is will be increasingly called upon as oil production declines
elsewhere. Production could be raised by large investments, but only
to a limited extent. OPEC’s peak is therefore mainly driven by
the amount of oil in current Middle East reserves, a quantity not well
known. A variety of industry-based estimates are available, judgement
of which gives the peak dates for particular countries given above.
As the OPEC peak
approaches, decline elsewhere forces the global peak of conventional
oil, which is likely to occur ar
ound 2010, with the date being sensitive,
in part, to the global economic situation, and hence demand.
world conventional gas peak
As global conventional oil declines, attention turns to non-conventional
oil, and oil substitution by gas, gas-to-liquids and probably coal-to-liquids.
Let us look first at conventional gas.
This Figure shows
the history of world gas discovery.
Discovery of Conventional Gas
Shows Annual discovery data, and Cumulative discovery.
(Revisions backdated to original field discovery date.)
Source: F. Harper, op. cit.
As the Figure shows,
global discovery of conventional gas in new fields peaked in the late-1960s
and has been in decline since. Global gas discovery in new fields is
now running at around 65 Tcf/year, about three-quarters of the current
consumption rate. As the graph shows, the likely maximum discovery,
at least within any
reasonable time-scale, is about 10000 Tcf. (Large
gas finds are still to be expected in Northern Russia.)
About 7750 Tcf of
conventional gas has been found so far, of which about 2400 Tcf has
been burnt, leaving 5400 Tcf or so as industry-data (proved + probable)
reserves. A simple mid-point peaking model of production would predict
that global production of conventional gas will peak when roughly 5000
Tcf had been used, i.e., about the year 2020 at the present demand growth
rate. (Note again that this is an approximate global aggregate calculation
to illustrate the current situation. Conventional gas is a different
animal to conventional oil, seeing a different depletion profile, and
being strongly affected by envisaged infrastructure in terms of pipelines,
and liquefaction and gas-to-liquids plants. For more detailed calculations
see the ASPO web site via Results.
The world distribution
of conventional gas is as follows:
Global Distribution of Conventional Gas
Shows gas that has been consumed (dark shading), and industry data
for (proved + probable) reserves (light colour). Excludes yet-to-
find. The latter is fairly small (at least in the medium term), so gas
production from a region probably declines when the ‘clocks’
on this figure tick round to about ‘8 o’clock’. Source:
F. Harper, op. cit.
The Figure shows
- North America is about at peak on gas.
- Europe is not far from peak; other regions have further to go.
- The world as a whole has burnt about half the gas that will take
to reach its gas peak.
- (Note that there is uncertainty over Russian gas; I do not yet know
if Russian gas reserves are overstated in the same manner as they
are for oil.)
Finally, in terms of the coming sequence of hydrocarbon peaks, we must
consider the ‘all hydrocarbons’ peak. Dr. Campbell's forecast
of this is shown in the Summary.
(For the details behind this forecast, see The
Calculations.) In essence, the fairly rapid decline of conventional
oil pulls down total output of ‘all hydrocarbons’ around
2010 or so, some way before the peak in the production of conventional
gas. An ‘all hydrocarbons’ peak has, of course, extraordinary
impacts on the economies of the World.
Now we turn from
data and calculations to people’s perceptions of the oil situation.
As of the current writing (Winter 2002) the gap between perceptions
and reality is wide. This section attempts to explain this gap.
The long period
of adequate oil supply si
nce the 1970’s, and hence the apparent
error of oil worries at that time, led to the creation of a deep intellectual
mythology about oil security. The main tenets of this mythology
(a). R/P ratio: The world has 40 years’ of proved oil supply,
and 60 years’ of gas. Since proved reserves are secure quantities,
and since more reserves will be located, any oil or gas resource-limited
shortages must lie at least 40 and 60 years, respectively, into the
future, and probably many more years beyond.
(b). ‘Running into oil’: Proved reserves showed large increases
in the late 1980’s, far exceeding consumption; so the conclusion
is that the world is “running into oil”, not out.
(c). Technology: Reported reserves for individual fields show dramatic
gains with time (for example, increases of nine-fold for the Canadian
fields reported by Odell; long-term averages of six-fold for US on-shore
fields, and three-fold for US off-shore fields; 30% increases, in some
cases, for large UK fields). These increases demonstrate the power of
technology to access increasing volumes of oil; and suggest that technology
is a mighty sword that can slay the dragon of depletion.
(d). Infinite resources, and the power of price: Here the views are:
- The amounts of oil in the world are “unknown and unknowable”.
- But the resources of oil are certainly very large, “effectively
higher price will always be able to “turn resources into reserves”.
- A company’s oil reserves are simply ‘inventory’:
‘it is uneconomic for
companies to hold too much; they stop looking when they have
30 years’ supply’.
- The geologist’s contention that there has been 35 years’
of decline in discovery
cannot be true: “We hear of famine, but see only plenty.”
(e). The price signal: This will give adequate warning of supply difficulties.
(f). Past oil forecasts: The
scares of the 1970’s said oil was
just about to run out; hence all past oil forecasts were wrong. It is
technically impossible to forecast oil’s future.
The above may read
like a parody, but all these views are well documented in th
and are from a wide range of reputable authorities who carry considerable
weight with governments and Energy Agencies.6
The mythology is
easily demystified, as follows:
(a). R/P ratio:
The world does have 40 years’ of proved supply of oil and probably
60 years’ of gas (depending on Russian reserves); and more oil
will certainly be found. But the simple physics of reservoir decline,
coupled with the mathematics of adding field outputs, puts the global
production peak in just a few years. Plotting production of those countries
past peak, and adding in their current (proved and probable) reserves,
graphically tells the story.
The need to use mid-point peaking, rather than R/P ratios, has been
known for over half a century, and it is inexcusable that Europe’s
DG-TREN, the IEA, and the UK government (all, admittedly, encouraged
by oil company public relations departments), still assess oil and gas
security in terms of R/P ratio.
into oil’: The proved reserves increases of the 1980’s (see
Figure below) were simply the outcome of the ‘Quota Wars’,
OPEC members upping reserves to maintain quota in a slack market. That
oil authorities like Professor Odell, or BP’s Peter Davies either
did not, or chose not to, check these data, and hence were able to conclude
that “the world is running into oil”, is simply beyond comment.
Reserves Data for Selected Countries
Annual data of proved oil reserves for the countries indicated, in Gb.
Note the step changes; and the sequences of years with no changes. (Not
sort to data to find out if global reserves are rising or falling !)
Source: Oil & Gas Journal, (and hence: BP Statistical Review), various
(c). The power
of technology: This argument has more substance, and re
quires at least
some effort to discover where the truth lies. Technology does improve,
and more oil is accessed as a result; the question being: ‘How
To find the answer one needs to understand the oil industry’s
reporting conventions, i.e., the typical reporting profile of a field’s
volume as the information passes from exploration geologist, to production
engineer, to field announcement, and finally onto balance-sheet proved
The IEA clearly understands none of this, and happily uses a graph in
its 2001 Insights on North Sea production to support the power of technology.
The graph instead shows the IEA is ignorant of how much oil was discovered
in the North Sea by the mid-1980’s (virtually all of it). The
IEA falls into a similar trap in the same publication when quoting the
supposed technology gains in Prudhoe Bay reserves, despite the facts
of reserves reporting for this field having been widely published.
As far as reserves growth (and hence apparent technology gains) goes,
the key, unwitting, villain of the piece is the U.S. A number of people
have tried to look at the issue of US reserves growth in detail, but
none so far, at least to our knowledge, has found definitive answers.
Clearly something has to explain Odell’s gains of nine-fold in
Canadian fields, and the US on-shore gains of six-fold; and it is not
At least part of the answer lies in the US’ unique field situation,
- Mineral rights make it sensible for every landowner to sink wells,
so single large fields have numerous owners, all pumping hard to get
their own (and others’!) shares. As a result, no-one, at least
in oil’s early days, had any real concept of the field’s
overall geology, and hence size.
- Field volume was often measured by the rule-of-thumb that the depletion
rate is 10%, so the field’s size was set simply by the production
rate. (A nice bit of circular logic when US decline rates are being
modelled to-day on an R/P ratio of 10.)
- SEC reporting rules, to prevent fraud, generally only allowed the
reporting of reserves “behind pipe” (i.e., produced by existing
wells). Such ‘proved’ reserves say nothing about a field’s
total reserves; and as a large field is ‘drilled-up’, such
‘proved’ reserves naturally rise.
- Many of the US fields are old, over 100 years in some cases, so there
have been technology gains, especially as secondary recovery went in.
(But to expect such gains in modern fields, particularly off-shore where
virtually all available technology is used in the field from the beginning,
to recover high start-up costs, is not realistic.)
As pointed out elsewhere, the application of US reserves growth factors
to the rest-of-the-world reserves, as occurred in the USGS 2000 report,
was explicitly rejected in the prior USGS report by Masters. This use
of the US reserves growth factors for global reserves has recently been
re-evaluated by the USGS.
The issues of the impact of technology and reserves growth are discussed
in more detail under ‘Increased Recovery’, above; and in
the University of Reading paper: Perspectives on the Future of Oil,
(d). Infinite resources
and the power of price: There is certainly is a lot of oil if one includes
the theoretical scope for enhanced recovery (i.e., over and above secondary
); and indeed the total amount of oil is “effectively
infinite” if all in-place oil of all types is included.
But to say that the volumes are “unknown and unknowable”
shows appalling ignorance of geological knowledge: the size and location
of most of the world’s conventional oil is known (hence, also,
of the oil with scope for enhanced recovery); and there must be few,
if any, large deposits of non-conventional oil that have not been located.
Humankind now knows where nearly all the oil is. The difficulty lies
in extracting it at a rate that meets current
and prospective demand.
And if cost were no object, all of the oil could indeed be accessed,
eventually (even though at a negative energy return in m
But this is what the whole argument is about: the peaking of conventional
oil is the end of the cheap oil.
See the University of Reading paper: Perspectives on the Future
of Oil for further discussion of this topic.
(e). Price signals
will give adequate warning: This is a widely held view, for example
the UK House of Lords Se
lect Committee report (Feb., 2002, op. cit.,
p18) has: “ .. we accept .. that at some stage this century oil
production will start declining. However, we go along with the majority
view to the extent that we do not believe that this presents an immediate
security issue of itself. … we should receive adequate warning
of any shortage of oil through the normal mechanisms of the market –
higher prices .. .”
The ideas to keep in mind here are:
- Hydrocarbons are commodities; very small imbalances in supply and
demand engender wide price swings.
- For this reason there were some price signals, but not especially
large ones, in advance of the oil price shocks of the 1970’s,
despite the underlying physical cause, the
peak in US output, having been well understood, and long correctly predicted.
- Much of the normal price signal of the world moving from intrinsically
cheap (Middle East) oil to intrinsically more expensive oil (offshore,
polar, and now deepwater) has been obscured by the sequestration of
oil company assets. Had the ‘Seven Sisters’ still been in
control, the world would by now be past the
peak of Middle East oil,
and hence have seen over time a gradual rise in the oil price from the
$10/bbl (2001 real-terms price) of the late 1960’s to the current
technical marginal price of perhaps $20/bbl.
- We have now received some of that ‘adequate
warning’ the House of Lords is waiting for: the rise from $10/bbl
in January 1999 to to-day’s price being driven in part by the
physical constraints of the approaching non-OPEC peak.7
Topics: Economic aspects for additional discussion.)
(f). Past forecasts
were wrong: Some 1970’s analyses did indeed say that oil was ‘about
to run out’, but at that time only 300 Gb of oil had been consumed,
and the accepted estimates of the world’s original endowment of
conventional oil stood at 2000 Gb or higher. This information was widely
known, and all authoritative analyses (e.g., ESSO, The UK Dept. of Energy,
Shell, The World Bank, etc.) put the global conventional peak around
the year 2000.
Rather than the
se reputable forecasts of the 1970’s ‘crying
wolf’, they were carrying the same warning
of the wolf’s approach (the global peak in conventional oil production)
as the calculations presented here. The World would be better prepared
for the approaching oil difficulties had the warnings of the 1970’s
Forecasts for additional information on this issue.)
- The world is
more-or-less at its non-OPEC conventional oil peak.
- The all-world conventional oil peak is about 10 years away, after
which production will decline at ~ 3% /year.
- Non-conventional oil production will increase, but significant constraints,
including cost, energy content, and CO2 emissions, will almost certainly
prevent these sources from fully offsetting conventional oil's decline.
- The world is about half-way to its peak on conventional gas, after
ion will fall rapidly.
on Humankind’s ascent up the ‘oil production’ mountain:
- demand was met,
- producers generally had to pro-ration,
- prices fell,
- economies boomed.
On our descent down:
- anticipated demand will not be met,
- users may have to ration,
- prices will rise,
- there will be inflation, recession, and international tension.
1. Some other countries past their oil peak include:
Albania (in 1983), Argentina (1998), Austria (1955), Bahrain (1971),
Benin (1986), Bulgaria (1967), Cameroon (1984), Chile (1981), Cote d’Ivoire
(1986), Egypt (1993), France (1989), Germany (1969), Greece (1986),
Hungary (1986), India (1998), Indonesia (1991), Israel (1971), Morocco
(1981), Netherlands (1989), Pakistan (1992), Peru (1982), Poland (1930),
Romania (1976), Spain (1983), Syria (1995
), Trinidad & Tobago (1977),
Tunisia (1980), and Turkey (1992).
It is very instructive to plot these countries’ production over
time; all serious students of the topic are advised to do this. It is
far more instructive still to plot both oil discovery data and oil production
data for each country; the harsh reality that you “cannot produce
what you haven’t discovered” soon becomes clear. The corollary,
of course, is once you know what you’ve discovered, you know what
you can produce. (And, using mid-point peaking, pretty much also when
you can produce it.)
2. Other countries near peak include: Australia, Ecuador, Malaysia,
Oman and Qatar. To show that these countries are near peak, you need
to know the size of their likely (‘proved plus probable’)
reserves, plus reasonable estimates of their yet-to-find. Such data
do not exist in the ordinary public domain. You can get such data by
talking to petroleum geologists, or from consultancy reports, or the
table given in the ASPO website, to be found via
Results, or from the data published by the USGS (provided you handle
r correctly, see The
- In general, most big simple old fields are efficiently produced with
primary and secondary techniques.
- Where additional technology is applied, field decline curve analysis
frequently demonstrates little late stage change in recovery, despite
the technology (e.g., Prudhoe Bay).
- Some heavy oils and difficult reservoirs are susceptible to steam
injection and other technologies. But the gains involved are generally
calculable; and tend
to add to the tail of the field’s decline
curve, with little impact on peak.
- There also may be recovery benefits for small difficult deepwater
fields, etc.; but these are anyway small.
- Most apparent ‘improved recovery’ is an artefact of reporting
practices; not a real change in recovery unforeseen at the field’s
4. M.R. Simmons. The World’s Giant Oilfields, Simmons & Co.
International. (See also an article by Leckie & Ivanhoe a few years’
back in the Oil & G
5. Here ‘OPEC’ signifies an aggregation of producing countries,
with production capability in mind, rather than implying political issues.
Some OPEC producers are already resource constrained (e.g., Indonesia),
and it is largely only the ‘Middle-East Five’ (Saudi Arabia,
Iraq, Iran, Kuwait and the UAE) which have swing capacity. In terms
of political role, it is OPEC’s ability to encourage members to
correctly quantify their resource constraints, and its own ability to
co-operate in the global task of depletion management, which will determine
OPEC’s standing during the coming supply difficulties.
6. Some examples of authorities holding these views include:
(a). R/P ratio: Just about everybody: The IEA until about 1997 (and
again it seems in 2000 and 2001); the EU’s DG-TREN until about
2000; BP and Exxon Mobil (whom we assume know better) in submissions
in 2001 to the UK and EU governments; the UK government’s own
high-profile Cabinet Office Energy Review in 2002 (despite many representations
on the folly of relying on R/P ratios made to the UK’s DTI by
the University of Reading, and others, since 1995!)
(b). ‘Running into oil’: This expression is particularly
associated with Professor Odell, but has been also used, in effect,
by BP’s Chief Economist Peter Davies, and others; and is part
of the argument in the BP and Exxon Mobil submissions to governments
(c). The power of technology: Widely quoted on all fronts; the IEA’s
2001 World Energy Outlook: Insights, being a recent example.
(d). Infinite resources and the power of price: Particularly associated
with Professor Adelman, but beloved by energy economists everywhere.
(e). Price signals will give adequate warning. Fairly generally held;
explicit in the UK House of Lords Select Committee report, February
2002; op. cit., (paragraph 27, page 18.)
(f). All past oil forecasts were wrong: Widely quoted (including by
Butler of the US’ DoE, the RIIA’s John Mitchell, BP’s
Peter Davies, Shell’s David Frowd, and the UK Government’s
Energy Review in 2002, mentioned above). This is a view that is deeply
held, despite the facts being contrary.
7. A view explicitly discounted in the two Exxon Mobil submissions (op.
cit.). These have:
220;The short term volatility of oil prices between
1998 and 2001 does not signal a new energy supply crisis.” (This
carries a message about their apparent, or real, level of understanding.)
to the top)