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How Much Oil Does The World Really Have Left?

July 7, 2004

Recent volatility in oil price and political instability in the Middle East have prompted fresh speculation about the long-term viability of a world economy based so heavily on oil. Pessimists claim world oil supplies will start to dwindle in as little as 5 years while optimists believe we have another 30 years before supplies reach their peak.

Experts generally agree the total amount of recoverable oil on the planet is around 2 trillion barrels, of which we have consumed almost 1 trillion - so roughly half the oil is gone. The rest will last another 40 years at current consumption rates. But consumption will not stay at current rates. It continues to rise steadily - from 54m barrels a day in 1986 to 82m barrels today, and with China and other Third World economies expanding rapidly, demand is expected to reach 120m barrels a day by 2025.

William Ramsay, Deputy Director of the International Energy Agency, told the NZ Petroleum Conference earlier this year he believes there’s enough oil to meet the world’s projected demand for at least the next 20 years. Ramsay predicts if crude oil becomes short, “natural market forces” will shift us towards other hydrocarbon fuels such as heavy oil, tar sands, shale oil or products made from natural gas or coal. In other words, he sees a “fossil-fuel future” for many decades yet.

This acknowledges, despite growing calls for more research into renewable energy, the world remains wedded to oil. Energy analyst Chris Stone believes market forces will eventually determine when the world turns away from oil to another source of energy. “The oil age will end when oil prices itself out of the market.”

He doesn’t see it happening in the near future and is sceptical of alarmists who predict sky-rocketing oil prices by the end of the decade. “That’s what they said in the 1970s and we ended up with Think Big.”

The Ministry of Economic Development’s NZ Energy Outlook to 2025, released last year, assumes an oil price of no more than $US25 a barrel by 2025 – an assumption that now seems optimistic. Prices have recently eased back after topping $US40 and Stone sees them staying above $US25 indefinitely.

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