I find it astonishing how few people realize what predictions like this one (Gulf Times: Oil reserves ‘sufficient for 42 years’) really mean:

The proven global oil reserves of 1,258bn barrels, excluding Canadian oil sands, are enough for 42 years at the 2008 production rates, a BP review said.

On the same basis, global gas reserves are sufficient for 60 years and coal 122 years, the 2009 BP Statistical Review of World Energy said.

OK, you ask, what does it “really mean”? It’s an explicit prediction that at current consumption rates we will be out of oil. As in not one drop coming out of the ground. And we’ll have no coal after 122 years and no natural gas after 60.

There are multiple issues here. Let me try to tease them apart.

The kind of “analysis” (to use too generous a term) in this article is the classic “R/P” nonsense. Divide reserves by yearly production, and you get the lifespan of the reserves. Of course, once you take the enormous step from saying, “this is just a very crude measurement of the reserve size”, to saying, “this is how long those reserves will last”, you’re taking on some pretty big assumptions and problems:

  • We know what the ultimately recoverable reserves are, which is highly suspect, never more than when talking about oil and natural gas. We’re dealing with state secrecy, as in the mysterious, never-depleting oil reserves of Saudi Arabia and various members of OPEC suddenly boosting their reserves because they had and incentive to lie (each country’s quota was based on its reserves, turning the whole exercise into one giant game of liar’s poker). Additionally, the level of “reserves” in any given field or country keeps changing. Technological advances make it possible to economically extract some reserves that would have been prohibitively expensive only a few years or decades earlier, plus there are still some discoveries being made, like the offshore, ultra deep water Brazilian fields. And don’t forget the further complications of market price and political sentiment–as the market tightens due to peaking and eventually declining world production, the price will rise considerably, making more expensive reserves suddenly economically viable. And price pressure will change the minds of a lot of voters regarding things like drilling in those fields currently off limits, as in many US offshore areas.
  • Making a prediction about production (and therefore consumption) of any fossil fuel decades from now is even riskier. Higher prices impact economies and put downward pressure on demand, as well as spur the adoption of lower-fuel consumption patterns and the development of functional replacements for petroleum-based fuels. To use one of my favorite examples: Imagine that someone comes up with a fantastic way to grow algae and turn it into biodiesel. It scales beautifully, it’s robust enough to work in a variety of climates, etc., but it’s expensive (producing marketable fuel at around $4/gallon), at least by July 2009 standards. What happens if the price of oil is quite volatile, as seems highly likely post-peak, and averages about $150 to $200/barrel (roughly $4 to $5/gallon for finished fuel)? How quickly do you think we’d be building algae biodiesel facilities here in the US so that we could use that fuel in 18 wheelers and then use petroleum for our gasoline vehicles?
  • And don’t forget the role of climate chaos, and therefore public policy in this. Every push from that quarter away from petroleum-based fuels alters the overall balance of the market and all that implies.
  • We won’t be able to produce oil (or natural gas or coal or …) at the current rate right up the moment we get the last bit of it out of the ground. Long before the day the last well runs dry many others will have stopped producing, restricting production and tightening the market, which will only push up prices and induce more volatility into the market. No one believes that we’ll be able to extract these reserves at the current rate right up the very last day.[1] I would contend that the R/P scenario is even worse than what most peak oil adherents (Apocalypticons excepted) assume.

In short, if you want to use R/P as a crude measuring stick, then by all means do so, but don’t say that we have “42 years of oil left at current consumption rates”, because it’s trivially obvious how false that is. Instead say that reserves are 42 times what we currently produce in a year. That’s not only more accurate, but it avoids the obvious and pathetic attempt at spin.[2]

[1] This is, sadly, probably not true. I’m sure that among Americans who believe a truly mind blowing list of Stupid Things, including [insert your own politically incorrect list here], you can find some who think this is possible. Assuming they don’t think peak oil, climate chaos, AIDS, swine flu, avian flu, UFOs, and who knows what else are all part of a vast global conspiracy to control their lives, of course.

[2] Let me be blunt here: The Cornucopian crowd, including oil companies and exporting countries, love to talk in terms of having X decades left of resource Y, simply because they know what kind of psychological effect it has. Mainstream voters and consumers hear how big X is and instantly think, “Oh? We have that much? Great! Nothing to worry about here because someone will come up with a solution in time.” And then they go shopping a “great deal” on a shiny new SUV.

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