How much oil is there, how much more will we use and at what price?

Nov 02, 2010 By Lois Bergeron
One reviewer wrote about the book: 'Gorelick weaves an intriguing story from what might have been a dreadfully boring, yet impressive collection of data and observations.'

Too often the debate over the world's use of oil has been marred by skewed information. In his recently published book, 'Oil Panic and the Global Crisis,' Stanford Professor Steven Gorelick lays out the facts about oil – its production and prospects – along with the consequences of both continued use and a shift to other energy.

Passions run high where is concerned. Witness the tumult over the BP drilling disaster in the Gulf of Mexico. But much of the public discussion about oil has been long on emotion and opinion while short on scientific fact, a state of affairs that Steven Gorelick, a professor of environmental Earth system science at Stanford, takes steps to rectify in his book, Oil Panic and the Global Crisis – Predictions and Myths, published earlier this year.

In Geofluids, a reviewer wrote, "Gorelick weaves an intriguing story from what might have been a dreadfully boring, yet impressive collection of data and observations."

For close to a century, there have been predictions that it is only a matter of time – perhaps just a few decades – before world oil reserves begin to run dry. The prospect seems worrisome, but with continuing advances in renewable energy, does it really matter? Stanford Report talked with Gorelick, a senior fellow at Stanford’s Woods Institute for the Environment, to get answers to that and other questions.

With all the advances in renewable energy, why should we even care if the planet is about to run out of oil? It seems like we would be better off without it.

In my view, like it or not, we will be using oil for a long time. Oil makes possible the transportation of people and products. Currently, most vehicles run on liquid fuel derived from oil and cannot take advantage of energy alternatives, although this is changing. In the meantime, there is no doubt that oil presents challenges related to our environment, economy and security.

Regarding whether or not we are running out of oil, estimates of the world's oil reserves have continually increased over the past 50 years, and global reserves are at an all-time high. From that perspective alone, the world is not running out of oil. Therefore, I don't believe it makes sense to assume that running out of oil will somehow solve the environmental problems associated with oil use.

Should government policies spur a shift away from oil?

Yes. For one, we need much stronger fuel economy standards.

I think we can do better than the newly adopted Corporate Average Fuel Economy (CAFE) standards, which will raise mandatory fuel economy rates from the current 27 to 35 miles per gallon, an increase of only 8 miles per gallon. With the original CAFE standards that went into effect in the 1980s, there was a 13 mpg increase in just four or five years. The standards should be in the 40 to 50 mpg range if we really want to make a significant dent in fuel consumption.

What about the impact of emerging economies? Even if we improve our standards, won't their increasing use of oil offset any reductions we achieve?

The emerging economies are certainly consuming their share of oil, as I detail in the book, and that share is growing. The good thing is that countries such as China are using oil more effectively and efficiently. Compared to the 1980s, China today uses about one-third the amount of oil to generate one unit of gross domestic product. So their efficiency has gone up.

Actually, it is a bit of a race between economic growth in these industrializing countries and how much more efficiently the entire world can use oil. If we ultimately have vehicles that can get 50 to 100 miles per gallon, that would offset a lot of the increasing use in the developing world.

Would you elaborate a little about the true cost of oil use?

First, the recent BP disaster was a wake-up call. There are obvious environmental costs associated with extracting and burning oil. Beyond those, the major cost is insuring the global provision of oil, given that most reserves are in politically unstable, or potentially unstable, regions. The U.S. alone spends about $50 billion per year for a military force able to defend the Middle East. This amounts to a hidden cost that is the equivalent of approximately $65 per barrel of oil used in the U.S. For reference, the current market price of oil is just over $80 per barrel.

Second, we will be forced to tap oil wherever it occurs, and that happens to be in more and more challenging and environmentally sensitive regions. Harsh, remote environments, such as offshore regions and the Arctic, are difficult and expensive to work in, yet vulnerable to ecological disturbances.

Third, we pay a huge cost for remaining under the strong influence of the Organization of the Petroleum Exporting Countries' production-based price controls. These controls have driven up the price of oil, and our dependence on OPEC oil is a continuing threat to our national security.

What can we do to limit OPEC's influence on our oil supply and mitigate the effects of sustained supply disruptions?

One way to combat a cartel is to become one. The United States should build stockpiles of oil when oil is cheap. But we need something much greater than the existing Strategic Petroleum Reserve, or SPR, which is just for temporary emergencies. We should have a stockpile that serves as an economic petroleum reserve, where we store something like five and a half times the volume of oil in the SPR. Other nations should be encouraged to build up similar stockpiles. Collectively, we could use our stockpiles to combat fuel price increases due to untimely OPEC production-based price controls.

Are there new technologies that will contribute significantly to solving our oil problems? When?

Yes, there are renewable and nonrenewable sources of energy that can substitute for the transportation role served by oil in the long run, and I think the ultimate substitute will be electricity. We can generate that electricity from a variety of sources, such as wind, solar and nuclear energy. We can use abundant natural gas and coal resources, although their use has its own environmental problems.

As far as the timing goes, transitions in technology happen relatively quickly. At the turn of the last century, every major city in the U.S. depended tremendously on horses for transportation. The automobile rapidly replaced them in a matter of about two decades. So when a physical or technological substitute is found, it will rapidly take over. One rarely goes back to an older, less efficient product or technology.

My sense is that we will move toward more efficient vehicles. The efficiency of electric vehicles is so much greater than gasoline-combusting vehicles that a transition to electric vehicles will greatly reduce our dependence on oil, even as oil continues to be used into the future to a much lesser degree.

Even if we won't run out of oil, isn't it possible that production will peak at some point and then drop off as oil becomes more difficult to extract?

The world may very well go through a peak in oil use, but a peak and decline is far more likely to reflect a decrease in oil demand rather than production choked by perilously low global availability of oil. The line between conventional liquid oil and unconventional oil, such as that derived from Canadian oil sands, will blur. Beyond that, major consuming nations will likely shift away from using conventional oil for transportation as concerns grow over security, stability and the environment. Based on the history of other nonrenewable Earth resources, it is likely that the world will move away from oil long before our global oil resources are exhausted.

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User comments : 26

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zevkirsh
not rated yet Nov 02, 2010
this article was good but left out one basic question. what about higher petroleum taxes in the u.s.?
gopher65
4.5 / 5 (8) Nov 02, 2010
This was a fair assessment of the situation, free from the extremist points of view of both the far right (oil is awesome and has no issues! Burn it forever!) and the far left (omg peak oil is here! We should all live in caves to preserve mother earth!).

I'm continuously disappointed by the vitriol and disinformation spewed out by both sides in the oil debate. Yes, oil is dirty and an unsecured energy source. Yes, we should switch to alternative sources of energy as soon as is reasonably possible. No, oil isn't running out. No, the world isn't about to end due to peak oil.

Why can't we just have a facts based discussion? There is something for everyone in the oil debate. The right wing can whine about oil security being a problem, while the left can whine about the environmental problems associated with oil. It seems to me like both sides want the same thing for different reasons... so why are they always fighting and exaggerating their talking points for to no purpose?
TopherTO
not rated yet Nov 02, 2010
Announcement of 'new' oil reserves rarely detail the difficulty in extracting it (ie. usng oil to extract oil). If we need to drill deeper, in more remote areas, what is the net benefit?
GSwift7
2.5 / 5 (2) Nov 02, 2010
"But much of the public discussion about oil has been long on emotion and opinion while short on scientific fact"

The same could be said about every single political hot topic of the past 2000 years. People are very quick to form opinions based on emotion, but very slow to correct those opinions when facts come to light. An even scarier trend is that politicians and experts have to reach conclusions whether the data is sufficient to reach a conclusion or not. Whatever happened to the phrase "look before you leap". Science used to be a cautious field when it came to accepting conclusions. Now we have a 'concensus of opinions' on just about any topic you can name, regardless of the completeness of the theories.
3432682
1.8 / 5 (5) Nov 02, 2010
Natural gas is plentiful, clean, inside the US, and cheap. What's the question?
Yellowdart
3 / 5 (2) Nov 02, 2010
this article was good but left out one basic question. what about higher petroleum taxes in the u.s.?


The problem with heavily taxing oil in order to push for other energy resources, is that you would stagnate your economy long before you'd make any progress.

When the better tech comes, itll switch naturally, simply from consumer demand.

What your also forgetting is that oil isnt just used for gasoline, it's used in a very wide set of applications like plastics as an example. Oil companies most likely wouldnt be significantly impacted, esp if they are on the forefront of new energy sources.
Slotin
1.5 / 5 (24) Nov 02, 2010
The problem of estimations of oil supplies is based on the fact, the OPEC countries tend to overestimate their oil reserves, as it enables them to increase their production quotes. Another problem is connected with the fact, the increasing amount of oil is consumed in oil deposits directly (for steam production and pumping) without impacting the free market . In 30's of the last century the energy contained in one barrel of oil was sufficient for production of another 140 barrels, in 70's the same amount was sufficient just for production of 17 barrels and now it's just 5-7 barrels. In such way the oil reserves decay with increasing rate, while the oil prices remain artificially low and unstable. Here are other factors impacting the volatility of oil prices, connected with the fact, oil can be stored much more cheaper way, then transported and countries have large national reserves.
holoman
3 / 5 (6) Nov 02, 2010
Author mentions more wind useage. A blog I just read makes the argument that wind contributes to increased CO2 emissions.

http://blog.ameri...?p=21882

We need to look at ways of cleaning up coal, natural gas, and using hydrogen from other
materials for energy generation.

Wind and solar are unreliable and a much better technology should be developed that we can count on
to keep the cost down, supplies up, and treats the
environment and breathing species better.
gopher65
not rated yet Nov 02, 2010
TopherTO and Slotin:

There are different types of oil, each of which requires different extraction techniques and different amounts of energy to extract. Also, as you mention, the depth and remoteness of the oil also play into it.

A few types of "oil": light sweet crude, sour crude, heavy oil, tar sands, oil shale.

Currently oil shales cannot be economically harvested, unfortunately (oil shale reserves are huge. HUGE). As for the others listed, light sweet crude is the easiest to extract and refine, while tar sands are the hardest. IIRC, light sweet crude extracted from wells in Saudi Arabia produces 30 times as much energy per unit of oil as it takes to extract that oil. Oil extracted from the Canadian Tar Sands in Alberta produces approximately 1.5 times as much energy as it takes to extract it... although that number is constantly improving as technology develops. Tar Sands oil extraction tech is still very primitive compared to other types of oil extraction technology.
rwinners
5 / 5 (2) Nov 03, 2010
Hate to say it, but Professors can be bought. I remember a couple sitting in front of a Congressional panel and testifying that tobacco smoke was not harmful to human health. Doctors too.
There are still huge reserves of carbon based energy in the earth's crust. Unfortunately, it is all dirty when used, and even dirty to produce.
Unfortunately, a large part of the US economy is involved in the production and distribution of this dirty energy.
It will take decades to do the switch to renewables, but it will be done.
In the meantime, the price of oil will depend much more on the value of the dollar than on actual demand.
ormondotvos
5 / 5 (1) Nov 03, 2010
War raises taxes. Gluttony leads to disease, even in governance. CO2 still exists. Coal poisons the air. Read theoildrum.com
Titto
1.8 / 5 (5) Nov 03, 2010
Please go and read about "A-Biotic oil"
This was the problem in the Gulf of Mexico and they drilled too deep into a-biotic oil. So oil is not fossil oil but self generating all the time. Fact!!!!! Oil will be there forever. Another global scam like AGW???
genastropsychicallst
1 / 5 (2) Nov 03, 2010
How much price is there, how much will we oil and at what use ? To be read on my website !
ian807
not rated yet Nov 03, 2010
Oil depletion is going to be a money problem long before it's a significant supply problem. The world uses 30 billion barrels a year. The USA uses 7 billion barrels a year. Increased oil prices cascade down the value chain and will depress the world economy for decades.
kjmclark
not rated yet Nov 03, 2010
"Regarding whether or not we are running out of oil, estimates of the world's oil reserves have continually increased over the past 50 years, and global reserves are at an all-time high."

If you believe the national oil companies. They won't allow third-party verification of their reserves, so those reserves could just as well be marketing spin as honest assessments. If you realize they have incentives to fudge the numbers, and look at their stated reserves history, it would be silly to take their word for it. But Prof. Gorelick seems to be doing just that.
Sanescience
5 / 5 (1) Nov 03, 2010
The history of humanity and economic activities is that something remains "popular" while it is "easy" (one metric being it is understood) until something "better" comes along.

Right now fossil fuels are "popular", and until alternatives are seen by the entities that manage them as "better", not much change is gonna happen.
Slotin
1.2 / 5 (21) Nov 03, 2010
Please go and read about "A-Biotic oil"
Theory of "A-Biotic oil" is colliding with the fact, oil becomes more and more difficult and expensive to produce. The thick oil soaked into porous rocks and sands often creates an illusion of partial regeneration of reservoir from the bottom, but it's only delayed effect of oil viscosity. Due the geothermal gradient it's actually quite improbable, some hidden resources of hydrocarbons (which are thermally unstable) are waiting for us bellow Earth crust. The hydrothermal synthesis of heavy hydrocarbons from carbon and watter was never replicated in the lab. I'd recommend to stay a realists.
ekim
5 / 5 (1) Nov 06, 2010
Please go and read about "A-Biotic oil"
This was the problem in the Gulf of Mexico and they drilled too deep into a-biotic oil. So oil is not fossil oil but self generating all the time. Fact!!!!! Oil will be there forever. Another global scam like AGW???

I'm not debating a-biotic oil. I'll need more information before I do that. However i will debate the size of the planet ,the amount of carbon contained within the planet,the energy to convert carbon to oil and the existence of perpetual motion machines.
Ravenrant
5 / 5 (1) Nov 07, 2010
"Regarding whether or not we are running out of oil, estimates of the world's oil reserves have continually increased over the past 50 years, and global reserves are at an all-time high. From that perspective alone, the world is not running out of oil."

That is the stupidest thing I've heard lately. Who is he, Zeno with a new non-sensical paradox? That is like saying if we only use half the supply every year we will never run out.

I'm sorry, but raising the estimates of how much there is every year until doomsday won't make more or make it an infinite supply as he is concluding from that idiotic statement. There is a finite supply, unless you believe the fringe that thinks more is being created all the time, and we WILL run out of burnable gas sooner or later. We should have plenty for lubricants though even when we finally become sane enough to stop burning the stuff.
droid001
1 / 5 (1) Nov 07, 2010
Today oil supplies about 40% of the world’s energy and 96% of its transportation energy. Never put all your eggs in one basket.
droid001
5 / 5 (2) Nov 07, 2010
Today oil supplies about 40% of the world’s energy and 96% of its transportation energy.
Never put all your eggs in one basket.
droid001
1 / 5 (1) Nov 07, 2010
Today oil supplies about 40% of the world’s energy and 96% of its transportation energy.
Never put all your eggs in one basket.
droid001
not rated yet Nov 07, 2010
Sorry
Tank
not rated yet Nov 07, 2010
Disappointing summary. No mention of the worlds need for oil in production of plastics and other organic compounds.

Just save a bunch of oil...Your right, I should just start saving a bunch of money, how crazy was I? It just grows on trees right? In order to save you have to by more and more, and that will cost more and more, negating the impact of the saving. Anyone who runs a business realizes the time value of money and holding billions/trillions of dollars in inventory is a huge drain on progress. Very poorly thought through.

With as much money that is associated with oil, its not likely that competing technologies will have solid footing. The money already invested will depress the rate of replacements, unless it is balanced out.

Very obvious that this guy is an environmental "scientist", and has very little depth in range of teaching other than the other environmental "scientists" teachings.

Eventually we will get away from oil for transportation and energy.
gopher65
not rated yet Nov 09, 2010
That is the stupidest thing I've heard lately. Who is he, Zeno with a new non-sensical paradox? That is like saying if we only use half the supply every year we will never run out.

I'm sorry, but raising the estimates of how much there is every year until doomsday won't make more or make it an infinite supply as he is concluding from that idiotic statement. There is a finite supply, unless you believe the fringe that thinks more is being created all the time, and we WILL run out of burnable gas sooner or later.

Few question that we're going to run out. Rather, it will become slowly become more economical to use alternatives to oil, eventually decreasing demand for oil as an energy source (though it's still great for making things out of). He's claiming that the current supply of oil is more than large enough that we'll be able to safely transition to other sources of energy, without a significant economic bump (IE, he's debunking the Peak Oil craze).
rwinners
1 / 5 (1) Nov 09, 2010
"Few question that we're going to run out. Rather, it will become slowly become more economical to use alternatives to oil, eventually decreasing demand for oil as an energy source (though it's still great for making things out of). He's claiming that the current supply of oil is more than large enough that we'll be able to safely transition to other sources of energy, without a significant economic bump (IE, he's debunking the Peak Oil craze)."

He is attempting to do so. However, the 'evidence' he relies on is not available in this article. I suppose anyone really interested should buy his book.