Is The World Running Out Of Oil?

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Table of Contents

Introduction
Research method
Literature review
Analysis and conclusion
Annotated Bibliography

Introduction

Scientists, geologists and other opinions makers have for years been trying to comprehensively answer the question on whether the world is running out of oil. To this day, there is no comprehensive answer to this question. This research paper argues that the world will not run out of oil as predicted by some environmentalists and geologists.

This argument is based on the fact that although the world has had its fare share of prediction that oil will be depleted sooner, the discovery of new oil fields, and the improvement of new technology which allows for more oil exploration and exploitation have proved that the world still has enough oil resources.

Research method

This research is based on the review of existing literature

Literature review

The 20^th century was awash with predictions that suggested that the world was facing an imminent shortage of oil. Most of these predictions have already been proven as false especially as more oil has been produced in the recent years triggered by more discoveries of oil fields.

Deming (b) however observes that even though the predictions have been proven wrong so far, there are new predictions that cast a lot of doubts about the longevity of the oil resource. Key among them is the Hubbert model, “which assumes that like all natural resources, oil is limited and finite” (1).

Deming (b) does not agree with this model. He argues that while conventional oil reserves may be finite, there is no precise way of measuring the ultimate amount of the resource making it even harder to measure it against the world’s consumption of the same. He also points out to the fact that the cumulative production of oil in the last 50 years has been outdone by the sizes of crude oil resources. This has led to an increase of oil reserves in the world.

Another notable author who disagrees with the Hubert Model is Bradley, who states that the theory is disapproved by the functional theory (1). But what exactly does the Hubert model state? Well, according to Bradley, the model is bell shaped and seeks to represent the trend that oil production will take over the years. In the model, Hubert predicted that the 1970s would experience a peak in oil production.

This was a right prediction. He also predicted that the US would experience a peak in gas production in the 1970s, but this has long been proven as an errant prediction. Another of his predictions that oil production would reduce considerable beginning in 2000; this has not been proven yet (Bradley 1).

The functional theory was developed by Erich Zimmerman and states that any static interpretation of a natural resource is futile because resources change with social objectives, react to revised standards of living, alter depending with the expertise or knowledge of the people handling them and change as new technology or arts are discovered. In this theory, Zimmerman suggested that man created resources through his knowledge and hence as his knowledge level increase, so would be the resources (Bradley (a) 6).

This theory is supported by Deming (a), who argues that the reason why the world has not yet run out of oil despite the many predictions suggesting otherwise could lie in the new technological development. He also states that high oil prices always signal an impeding shortage of supply thus sending oil explorers back to the fields (1).

Among the notable oil scares made in the 20^th century include the 1916 Model-T scare, the 1918 Gasless-Sunday scare, the 1920-1923 John-Bull Scare, the 1943-1944 Ickes-Petroleum reserve scare, the 1946-1947 Cold-War scare and the 1947 Winter scare. In the 1970s, the world faced similar scares caused directly by politics in the Middle East. They include the 1973 Arab-embargo oil scare, and the 1979 Iranian-revolution oil scare (Deming (a) 2).

The ‘predictions of doom’ on oil production have not had an entirely bad effect in the world. Deming (a) notes that the predictions have led to more innovations and today, men know that they do not only have to rely on conventional oil resources but can as well rely on unconventional resources such as oil shales and tar sands for production of oil.

Tar sands

The exploitation of tar sands began in Canada in 1967 (Deming (b) 4). Over the years, this unconventional oil resource has proven that quite huge amounts to last the world’s oil needs for the next 1000 years can be produced from the same. Although it was challenging at first usually pushing the cost of production high, the newer technology employed currently has brought the costs down while increasing the amount and rate of production. According to Lomborg, the extraction of oil from tar sands in Canada has helped in pushing the prices of the commodity down from 28 US dollars a barrel in 1978 to 11 US dollars a barrel in 2000 (128).

Oil shale

Oil shale may be more expensive and difficult to extract, but the entire resource in the United States alone is estimated to provide for the country’s oil needs for a period of 26,667 years (Deming (a) 5).

Citing information from the Energy information Agency in the US, Lomborg states that current estimates show that a combination of shale oil and tar sands can help in the production of 550 billion barrels of oil, with the production cost estimated to be approximately 30 US dollars (128). This would then lead to a 50 percent increase in global oil reserves.

Lomborg further reveals that the total size of recoverable shale oil through out the world is unbelievable to most people who hold the opinion that the world will run out of oil (128). In the entire world, it is estimated that there are 242 times more resources in shale oil than contemporary resources, which could last the world 5,000 years or more.

Just like Deming (a), Sah makes a distinction between oil reserves and oil resources and states that those who predict that the world is running out of oil do so by judging prevailing world consumption of oil against the available oil as available in the reserves (242). By doing this however, they miss the mark because resources are more wide and probably a lot of oil resources are yet to be discovered. The fact that exploration for oil remains an ongoing process means that no geologist or environmentalist can correctly predict the extent of the resource.

According to Sah, “reserves are petroleum (crude and condensate) recoverable from known reservoirs under prevailing economics and technology” (242). The reserves can be equated to any past reserves plus additions to reserves minus any production from the same reserves.

Accordingly, oil reserves can change as new technologies for oil exploitation keep on being discovered. The reserves can also be added through the discovery of new oil fields; discovery of new reservoirs; the extension of reservoirs in existing fields; and redefining reserves using newer oil extraction technologies.

Tertzakian is another writer who believes that though the world is no where near running out of oil, it is the world unquenchable thirst for ‘cheap oil’ that places much pressure on explorers (8). According to him, the world is better off agreeing that oil in future will take more to find, to drill and exploit. As such, he says that price spikes and other incentives can be used to encourage oil companies to find and drill even more oil wells.

Like Lomborg notes, man becomes better in exploiting resources once he is pushed by the need to do so (125). As such, the world can expect that newer and more efficient technology will keep on being discovered for the sake of finding better ways of not only exploring oil, but exploiting already existing oil fields. Technology is especially significant in the exploration of oil in fields that had been deemed too complex to drill or where the oil drilling process was deemed too expensive.

Analysis and conclusion

As observed in the literature review section and unlike what some environmentalists and geologists would make the world believe, there is no immediate need to worry about running out of oil because as Lomborg puts it, “judging what is left of the oil resources is akin to looking at someone’s refrigerator and arguing that once the food therein is finished, then they will starve to death” (125).

To justify the thesis of this research paper, it is important to observe that the oil resource is not a finite entity because in addition to already discovered oil fields, there may be numerous others lying undetected and it can only take exploration and maybe some newer technology to discover them.

Since exploration will only be spurred by the need for extra production beyond what the world already has in the reserves, it will take a reduction in production for explorers to spend the money that usually go into the exploration process. Until explorers declare that no more oil fields are being discovered, it is immature for geologists or any other person to declare that indeed the world is running out of oil.

Based on the arguments of the authors analyzed herein, it is clear that even those claiming that the oil resource will soon run out have no solid evidence to base their claims. More to this, is the fact that none of the predictions some made as early as 1850s have never come true is evidence enough that after all, no one has the abilities to foretell when a natural resource like oil cannot be produced anymore.

This is because as oil exploration continues, the chances of newer oil discoveries increases. New technology development also gives us the assurance that just as long as innovators continue searching for better ways to explore and exploit oil; the world could very well be able to go back to the oil wells and reserves to exploit more oil using more efficient technology.

Annotated Bibliography

This section gives a brief overview of the sources used in the essay. It contains seven sources (books and journals) which have addressed the oil resources agenda extensively. In this section I have identified the author(s), his argument and his conclusion. Most of these sources have considered the views of oil doomsters who claim that oil is a finite resource and based on this, I have come with proven evidence that shows otherwise.

Bradley, Robert. “Are we Running Out of Oil?” Property and Environment research Center Reports September (2004): 3-6.

This report is written by researcher Robert Bradley in response to a National Geographic published in June 2004 claiming that the world was witnessing an end to low-cost oil. Bradley claims that though environmentalist and geologists have always published alarming reports about the extinction of oil, none of their predictions have come true so far. He gives the example of geologist King Hubert who had predicted that oil production would be at its peak in the 1970, but would hit a deep decline in 2000.

According to Bradley, the geologist’s predictions have already been proven wrong by oil production in recent times, with 2003 recording a 2.5 production than was the case in 2000. Supporting the argument that the world is not indeed running out of oil, Bradley cites the work of different authors chief among them Erich Zimmerman. According to Zimmerman’s work, people should not assume that the oil resource is fixed since the extent of natural resources is not known to man.

“Resources are highly dynamic functional concepts; they are not, they become, they evolve out of triune interaction of nature, man and culture in which nature sets outer limits…” (Zimmermann 814-15, cited by Bradley 4). In conclusion, Bradley argues that even the lowest oil production periods in the world were not a result of the scarcity of the resource, but as a result of government interventions that blocked oil production hence distorting the oil market processes.

Deming, David (a). “Are we Running out of Oil?” Policy Backgrounder 159 (January 2003): 1-14.

Writing for the National Center for Policy Analysis, Deming starts his article by acknowledging that oil resources are non-renewable. He further observes that for more than 150 years, “harbingers of doom” who include geologists and environmentalists, have been predicting that the world’s oil resources would run dry sooner or later.

He however states facts that contradict the positions posed by the scientists. Key among these facts is the continued production of oil throughout the world especially as the 20^th century came to an end. Deming also points out that by adjusting oil prices to inflation, it is clear that the prices for petroleum products, gasoline and other oil related products are lower now than they were 150 years ago.

His third fact supporting the analogy that the world is not running out of oil is the fact that the total oil endowment in the world has witnessed a significant increase. As a result, the discovery of new oil resources is higher than the amount that oil driller can take from the ground.

To Deming, the ‘gospel’ about extinction of oil has become a favorite past time among prognostics. He for example observes that the US population had been issued with an oil shortage warning even before the first well was ever drilled in the country back in 1859. The writer observes that nature has always proved people who predict an oil shortage wrong through events like the oil glut that was observed in the world in the 1990s.

Deming, David (b). Oil: Are we running out? Second Wallace E. Pratt Memorial Conference “petroleum provinces of the 21^st century. Jan. 2000. Web.

Deming has written about oil extensively. He specifically appears incensed by people who keep claiming that the oil resource is finite without clearly understanding their allegations. According to him, oil just like other fossil fuels can be categorized as either reserves or resources. He defines reserves as the identified oil resources, which awaits extraction and exploitation.

Accordingly, he states that reserves keep on expanding as new technological innovations are made in the world. Resources on the other hand include the oil field which have already been identified and those that are yet to be identified. It is because of the definition that he gives to the former that he takes offence with people who keep predicting a looming oil shortage or extinction based or already identified reserves.

Citing research from other writers, Deming has done a good job of proving that crude oil reserves in the United States alone grew at the same pace as the consumption rate from 1915 to 1995. Like other authors who oppose the notion that oil is a finite resource, Deming observes that the 20^th century was full of ‘false’ predictions which have been proven wrong the cumulative production of oil in the same period.

He also observes that even if conventional sources would be depleted, man has proven that he can successfully use unconventional resources such as tar sand to produce oil.

The author does not doubt that there could be interruptions in supplies and prices as the world tries to make the transition to unconventional sources of oil, but he does state that the world can be sure that the oil potential in the unconventional sources can support the petroleum needs in the world for up to one thousand years.

Lomborg, Bjorn. The Skeptical environmentalist: Measuring the real state of the world. Cambridge: Cambridge University Press, 2001. Print.

In the ‘optimists and pessimists arguing’ subsection of his book, Lomborg addresses the question of why people are bombarded with news about running out of oil, while it actually never happens. He notes that it is odd that human kind is using more and more oil, yet available statistics show that there could be even more oil deposits left.

The writer offers three reasons why the world is not running of oil and probably will not in the near future. First, he states that oil being a known resource means that it is “not a finite entity” (125). He explains that the fact that man does not know all oil fields and hence needs to keep exploring for the same means that there is a probability that he will keep finding new fields with new oil.

The second reason pointed by this author is that humankind has become better at exploring and exploiting as demand for resources rise. He explains that new technology has been a major contribution to the extraction of already existing oil fields. In addition, technological innovations are playing a major role in tracing new oil fields, and also enabling oil companies to exploit fields that had previously too difficult or expensive to exploit. The third reason cited by Lomborg is man’s ability to substitute.

In his explanation, he argues that man is not specifically interested in oil for the sake of it, but his interest lies in the services that oil provides. This means that he can easily substitute to other sources of fuel, energy and heating when oil becomes too expensive. This then means that oil will only be used for services that cannot be easily be substituted.

Sah, S. L. Encyclopedia of petroleum Science Engineering. New Delhi: Gyan Publishing House, 2003. Print

In pages 86-87 of this book, Sah documents the significance of the discovery of giant oil fields in different parts of the world. Most importantly, he lists the importance that oil explorers attach to new oil wells. First on the list is the fact that the new fields contribute significantly to the world’s oil reserves.

More to this, there is an understanding among geologists that the position of “tectonic setting, geological history and conditions for hydrocarbon formation…” (183) contribute significantly to the understanding of oil origin and supply of the same in future. Second on Sah’s list is the fact that the giant fields are not located in one part of the world. It is however notable two thirds of such well are to be found in the Middle East.

Third, Sah notes that even though the frequency of giant wells have decreased over the years, some regions like West Africa and Brazil which were previously unexplored continue to offer new prospects to the world oil market. Sah argues that the equation to present oil reserves is attained by adding past reserves to additions made to reserves and then subtracting the production made from such reserves (246).

From this equation, he argues that oil reserves and their capacities are bound to change with time especially because new fields keep on being discovered; reservoirs fields keep on being extended; and changes in extraction technology keep presenting extractors with new ways of getting more oil from existing fields.

Tertzakian, Peter. A thousand Barrels a Second: The coming oil break point and the challenges facing an energy dependent world. London: McGraw Hill professional, 2007. Print

In the first chapter of his book titled “lighting the last whale lamp”, Tertzakian states categorically that the world is simply not running out of oil. He however observes that the world may be experiencing the cheap oil that is most preferred due to its low sulfur content.

According to the writer, the dependency that people place on the cheap oil has grown tremendously over the years and is also facing pressures from forces from business, policy, geopolitical and environmental quotas, which may eventually lead to the growth and dependency reaching a breaking point. The writer is however quick to state that with radical technologies in oil exploration today, this will eventually lead to the rebalancing of oil production, which will in-turn lead to more growth in dependency on the same.

Tertzakian notes that any time in the oil production that the world is faced with uncertainties, radical technologies are developed with contribute significantly to a rebalance in production. He however notes that at some point governments have had to impose aggressive taxes on oil products in order to rebalance demand, but this usually happens for a short-term before a solution to the oil production is found.

Although this book chapter deals primarily with the whale oil which was sought after for lighting before the invention of kerosene and later the light bulb, Tertzakian draws similarities in the fact that the pressures that face human kind for energy solutions will always lead to greater inventions, which in turn mean that explorers will only give up exploring for oil when it has been completely proven that oil deposits are no more. This is unlikely to happen in the foreseeable future.

Maugeri, Leornado. “Oil: Never Cry Wolf—Why The Petroleum Age Is Far From Over.” Science 204. 5674 (2004):1114-1115.

This author argues that the Hubert model which oil doomsters are using to herald an end to oil is nothing more that geological faith. Maugeri observes that there are no enough geological facts for the oil doomsters to claim that they can specifically predict when the oil resources will cease from being. Although he specifically acknowledges the view that hydrocarbon reserves are finite, he says that it is contrary to the Hubert model for geologists or environmentalists to claim they know just how finite the oil reserves are.

Like other authors analyzed herein, Maugeri draws a distinction between the already identified oil resources and the yet-to-be-discovered resources. He argues that besides the geological knowledge that most of the oil doomsters possess, they need also to acknowledge that technological development and economics of oil have taken over the evolution of oil production.

Maugeri concludes by stating that “geology is not destiny, but rather only a part of a much complex picture that does not indicate the world is running out of oil” (1115).

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