Until we explore the entire planet as carefully as we did Oklahoma and Texas, our assessment of global oil reserves will have plenty of room for surprises. _Vaclav Smil
Deeply held beliefs go beyond evidence and logic. Thus they tend to be unfalsifiable, invulnerable to demonstrable facts or reason.
Take belief in Peak Oil Doom. There are several blurred and shifting definitions of "Peak Oil", but none of them stand up to sustained examination. With any belief -- such as belief in a deity -- as long as one is not pressed for a rigorous definition of exactly what it is one believes in, there is little point to the argument. So what, exactly is this "Peak Oil" that so many people either do or do not "believe in?" Is it:
1. The point at which half the world's oil supply has been extracted and consumed?
2. The point at which oil production is at its historically highest point?
3. The point at which the cost of oil production can only go up?
4. The point where it costs as much to produce the oil as the oil is worth?
5. The point where oil consumption outruns oil production?
6. None of the above
7. All of the above (including none of the above)
You might point out to the peak oil religionist that "authorities" have been declaring "Peak Oil" since the 1800s or before. Geologists, oil executives, government leaders, spy agencies, military organisations -- a wide array of authorities -- have declared peak oil every few years over the past 140 years or so. There is nothing new about this belief. But every new generation of believers is certain that it is living in "the last days of oil." Their belief is strong -- and unfalsifiable.
You can never really know whether what you have is "true peak oil" or "fool's peak oil" except perhaps in hindsight, and even then you may not live long enough to ever know the truth. Price controls on gasoline, for example, might artificially create supply shortages that last as long as the price controls, but clearly that is only one variety of "political peak oil." It goes away when the price controls are revoked.
Peak Oil believers -- like all religious believers -- rely upon "revealed truth", or argument from authority. Whether a retired geologist, an investment banker, an energy economist, a sleazy con artist, or whatnot -- a believer must have someone in whom he can place his trust. Once a belief is established, it extends tentacles deep beyond ordinary logic into the territory of faith -- which is not subject to reason.
What is the finding and development cost per barrel of oil these days? The figure has varied over the years, going up and down. From 2001:
Thanks to new exploration, drilling, and recovery technology, the worldwide finding and development cost per barrel of oil equivalent (boe) has dramatically declined over the last 20 years, from an average of about $21 in 1979–81 to under $6 in 1997–99 (in 2001 dollars) (9). _EnergyBulletin
A recent Citigroup source says that the finding and development cost in 2010 has gone up to $18 from $14 in 2004. So you see that these costs can fluctuate over time, according to technology and politics. Keep in mind that the Obama dollar is worth less now than it was 30 seconds ago, so all costs in dollars should be standardised.
Another interesting question is the amount of oil that is left in the ground when a well is depleted. As technology improves, we are recovering a higher percentage of the oil -- meaning that we can now often go back to old and "depleted" wells and reap another rich harvest of oil.
At the same time, the recovery rate from world oil fields has increased from about 22% in 1980 to 35% to-day. _Energy Bulletin
By 2030 more than 50 percent of the known oil will be recoverable. Also, by that time the amount of known oil will have grown significantly, and a larger portion of unconventional oils will be commonly produced, bringing the total amount of recoverable reserves to something between 4,500 billion to 5,000 billion barrels of oil. What’s more, a significant part of “new reserves” will not come from new discoveries, but from a new ability to better exploit what we already have. _SciAm
What is the "life index of world reserves?" It is the ratio between proven oil reserves and current production. In other words, about how long can we expect reserves to last? Funny thing about that, the life index of world reserves has been improving -- the opposite of what one might expect in the face of "Peak Oil."
All these factors partly ex-plain why the life-index of world reserves...has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and reaching about 40 years in 2003.
Today, all major sources estimate that proven world oil reserves exceed 1 trillion (10 12 ) barrels, while yearly consumption is about 28 billion barrels (10–13).
Overall, the world retains more than 3 tril-lion barrels of recoverable oil resources (14). _EnergyBulletin
North America has seen about a million exploratory oil wells, whereas the oil rich regions of the Persian Gulf have seen only a thousand or two. [S] The planet has barely been explored or surveyed for hydrocarbons.
What we are looking for here are demonstrable or refutable facts, observations, data. We are not looking for authority figures to put our faith in. That is for religious believers and disciples. The religious faithful argue from revealed authority. The rest of us choose to look at what we can see, touch, and reason with.
For example, the mundane reality that motivates modern oil production has a lot more to do with the development policies of oil dictatorships -- which shut out modern internation oil concerns -- than with how much or how little oil is in the ground.
Critics could note that new oil discov-eries are only replacing one-fourth of what the world consumes every year (fol-lowing a declining trend that began in the mid- 960s), and that increases in re-serves largely derive from upward revi-sions of existing stock. However, the real issue is that neither major producing countries nor publicly traded oil compa-nies are keen to invest money in substan-tial exploration campaigns. The countries richest in oil have minimized their oil in- estments during the last 20 years, main-ly for fear of creating a permanent excess capacity such as that which provoked the crisis in 1986 (when oil prices plummet-ed to below $10/bbl). In fact, countries such as Saudi Arabia or Iraq (which to-gether hold about 35% of the world’s proven reserves of oil) produce petroleum only from a few old fields, although they have discovered but not developed more than 50 new fields each. Moreover, in countries closed to foreign investments, the technologies and techniques used are, in most cases, obsolete.
Nevertheless, international public oil companies have faced two sets of limits to their expan-sion in the last 20 years. The first is inaccessibility to foreign in- estment in the largest and cheap-est reserves—those in the Persian Gulf. Second are the demands of financial markets, which for years have insisted that compa-nies provide unrealistic, short-term financial returns that are in-consistent with the long-term na-ture of oil investments. This has compelled private operators to reject op-portunities that would normally be deemed economically worthwhile. _EnergyBulletin
We would better understand the political undercurrents behind production fluctuations, if we were more aware of them and took them as seriously as they deserve to be taken. If a country lacks the technical expertise to develop an oil field -- or to retrieve as much oil as possible from that field -- production numbers are artificially depressed for political and bureaucratic reasons. The oil is still there, but you would never know this merely by looking at production figures.
Peak oil disciples and believers reap much secondary gain from their faith. An important bonus is the pride of knowing something that other people don't know -- the end is near. It takes something much more potent than mere logic and data to overcome such advantages.
By Al Fin