During the 1970s many analysts warned that the world would soon run out of oil. Yet they were wrong.
The experts dire predictions were emotional and political reactions. Even at the time, oil experts knew that they had no scientific basis. Just a few years earlier oil exploration had revealed enormous new oil provinces on the North Slope of Alaska and below the North Sea off the cost of Europe. By 1973 the world had consumed, according with experts best estimates, only about one eighth of its endowment of readily accessible crude oil (so called conventional oil).
However, the next oil crunch will not be so temporary. Several analyses of the discovery and production of oil fields around the world suggest that within the next decade, the supply of conventional oil will be unable to keep up with demand. This conclusion contradicts the picture one gets from oil industry reports, which boasted of 1,020 billion barrels of oil (Gbo) in "proved" reserves at the start of 1998. Dividing that figure by the current production rate of about 23.6Gbo a year, might suggest that crude oil could remain plentiful and cheap for 43 more years, probably more because official charts show reserves growing.
Unfortunately, this appraisal makes three critical errors :
From an economic perspective, when the world runs completely out of oil is not directly relevant: what matters is when production begins to taper off. Beyond this point, prices will rise unless demand declines commensurately. Using several techniques to estimates the current reserves of conventional oil and the amount still left to be discovered, we conclude that the decline will begin before 2010 .
While the potential magnitude of the global fossil resource base is truly gigantic, it would be a tall order to transfer more than a small part of these quantities into actual energy reserves. In the past, it was possible to transfer more than sufficient quantities from resources to reserves. The reserves to production ratio varied between 40 to 70 years for gas and between 10 to 45 years for oil. Additions to reserves (from the resources base) generally outpaced increases in annual production leading to a gradual rise in the reserve to production ratio, especially for natural gas, during the last 15 years. In the future, it may also be possible to transfer sufficient quantities of fossil resources to reserves to keep up with the increases in consumption, no matter how difficult such undertaking may appear from the current perspective. High rates of technological progress and changes in extraction economics would be required in the reported fossil, renewable and nuclear energy requirements.
There are other possible obstacles in utilizing large portions of the global fossil resource base . They include financing and environmental constrains. For example, a large part of the estimated resource base of 5,000Gtoe (toe = tonnes of oil equivalent) consists of coal. This is certainly sufficient to provide enough fossil energy even for a high demand scenario well beyond the next 100 years, but this may not be a viable strategy. Consumption of such quantities of fossil energy translates into cumulative CO2 of the same magnitude, almost 5,000GtC, or more than 6 times the current atmospheric CO2 concentration. A shift to other sources of energy, and global energy decarbonization, are likely to occur due to other reasons than resource depletion.