Proven Oil Reserves - Fact or Fiction?
Posted by Max Dunn Wed, 25 Jun 2008 05:33:00 GMT
When people attempt to prove that the world has plenty of oil left, they often quote oil reserve numbers. But can we really trust these numbers?
Here is a graph of the commonly accepted ‘proven’ oil reserves:
Right away, it is obvious that something is not right with this “Proved Oil Reserves” graph. Why the huge 300 billion barrel jump in OPECs reserves in 1987? Was this the result of some huge discoveries? Looking at the “Annual Oil Discoveries” graph above, or this graph below, we can see that this is not the case.
What did happen in the 80s is that OPEC set limits on how much oil its members could pump based on their proven reserves. Not too surprisingly, the proven reserves of all OPEC countries leaped up as they suddenly “found” new reserves.
The other incongruity in the reserve graph is that it doesn’t go down. Common sense tells us that when we continually take something away from a finite source, it gets smaller. However with oil math, 300 minus 25 is still 300.
Unfortunately, getting real numbers for proven reserves is not easy since the country with the worlds largest reserves, Saudi Arabia, releases very little information about its oil industry and doesn’t allow any outside audits.
So when you hear the argument that the world has plenty of oil based on the proven reserve estimates, don’t assume that these figures bear any resemblance to reality.