We’re not awash in oil, In fact, the oil’s running out!

By Fred Pearce

Remember that frenetic period in the 1970s when all hell broke loose as oil shortages sent prices sky-high. Well, it was just a blip. Or so says Colin Campbell, a geologist with Petro Consultants, who advise governments and industry. Campbell says there’s some real mayhem in the pipeline--the beginning of the end for the oil industry. 
He underlines his message with one simple and alarming fact: “The world’s oil companies are now finding only one barrel of oil for every four that we consume.” 
The world is probably only two years off peak oil production, after which decline is inevitable. Meanwhile, as demand for the stuff continues to rise, the industry is in denial about the looming crisis. 
The industry’s statistics don’t reflect any of this. In its latest annual review, British Petroleum (BP) suggests that there is an ever-rising tide of oil discovery. But this, Campbell says, is just sleight of hand. For commercial reasons, companies deliberately underreport their finds in the early days of drilling in new fields. They then adjust them later. 
“The impression is left,” says Campbell, “that new finds are being made through the glories of advanced technologies. This is rarely the case.” 
This subterfuge may not matter much when new fields are being discovered. But now that virtually the whole world is mapped for oil, it obscures the awful truth that there is no more new oil. To date, the world has extracted about 820 billion barrels of oil. Known reserves are about the same. Add in a bit more luck and, Campbell reckons, “there is around a trillion barrels left” -- Or about 40 years’ worth. That is time enough to change horses, except for the small matter of production trends and prices. 
About half of the oil left is in five “feudal” countries in the Middle East, headed by Iraq, Saudi Arabia and Kuwait. These are the only countries that can vary their output according to market conditions. And when their market share is high, they can trigger a price crisis. 
It happened in 1973 when the Big Five’s share hit 38%. After that, it fell to 18%. But, because there are no new fields, that crucial market share is now creeping back up, and it is predicted to hit 35% in 2001. That, Campbell predicts, is when they will pump up the prices. 
Publicly, the oil industry insists that low prices are here to stay. But insiders may be preparing for a crisis. In 1998, the industry supply watchdog, the International Energy Agency, said that only “unidentified unconventional” oil sources could fill the gap. These sources include oil locked up in shales and bituments, or beneath the deep ocean. “But, says Campbell, although we could eke out these still-distant new sources in the long run, they can’t put off the day when output begins the long slow march downwards.” 
Campbell warns that the oil price shock could trigger a stock market crash -- maybe even war. Perhaps geologists should leave such predictions to the economists. But equally, economists have been playing fast and loose with geology for too long, believing that the market can always conjure up more oil whenever needed. 
In the real world of oil, the geologists have always been king. And if they are now saying the game is up, we should listen. 


(Fred Pearce writes for the distinguished British magazine New Scientist, where this article was first published.)

From the CCPA Monitor, Page 7, February 2000

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