The case for an oil-free future
Oil and development: The Midas touch in reverse
The oil industry - a boon or burden for its workers?
Climate change - the biggest threat
International financial institutions - key players unlocking global oil
Corporate capture of universities
UK and global resistance to big oil
the oil curse and solutions for an oil-free future
Precise figures for existing oil reserves do not exist. This is partly due to limitations in the technology used to estimate the size of underground oilfields, but also because companies and countries have an interest in exaggerating their so-called 'proven' (defined as 90% certain28) reserves. For example, OPEC29 countries are allocated a production quota based on their proven reserves - it is therefore in their interest to exaggerate reserves in order to maximise production and income.
At the end of 2003 there were estimated to be over 1.1 trillion barrels of proven oil reserves around the globe.30 But these reserves are very unevenly distributed.
Saudi Arabia holds about a quarter of these oil reserves, while Iran, Iraq, Kuwait and Abu Dhabi account for another nearly 40% between them31. Outside of the Middle East, the two largest reserves are in Venezuela (6.8%) and Russia (6%).
Global oil consumption is close to 80 million barrels per day, and is also very unevenly distributed. The USA consumes over a quarter of this, whilst producing only 9.2%, making it (on a per capita basis) the most heavily-consuming and import-dependent country in the world. The Middle East, meanwhile, produces 29.6% of global production but only consumes 5.9%. The Asia Pacific region (including Australia, China, India and Japan) imports the greatest percentage of its consumption, using 28.8% of global supply but only producing 10.2%.
The UK consumes about 1.6 million barrels daily. The UK currently consumes slightly less than it produces and so remains a net oil exporter. However, production is in decline and the UK will become a net oil importer by 2010.32
Oil provides around 40% of globally-traded energy and 90% of global transport fuel, and is crucial to the global economy. A reliable supply also underpins most national economies, leaving them vulnerable to price increases - which tend to increase inflation, depress consumption and bring down economic growth33. 2004 saw a particularly sharp climb in the price of crude oil, as a result of increasing consumption in China and India, as well as conflict in oil-producing states like Iraq, Nigeria and Venezuela.
As rising oil demand begins to outstrip increases in supply, this will hit the global economy. Although known reserves could sustain current consumption levels for the next 41 years, an increasing number of analysts are concerned that the peak of oil production will hit soon, and rate of production will thereafter be unable to keep up with growth in consumption.
Global consumption has already overtaken the discovery of new oil fields - that mark was passed in 1981. The world has been eating into its reserves ever since. Although production has so far been able to keep pace with demand, at some stage this declining rate of discovery will lead to a downturn.
Although the rate of depletion has slowed as improving technology makes previously inaccessible reserves commercially viable, there is growing evidence that the really big discoveries have all been made and that consumption is set on a collision course with production. This collision could come as early as this decade.
Since the world continues to be dependent on oil, the spectre of a supply crunch has enormous implications. Inefficient and dirty fuels like heavy oil will become increasingly attractive.34 Violent campaigns to control governments in countries with remaining reserves will intensify. Without an effort to develop clean, renewable and locally-sourced fuels to replace oil, the ensuing scramble for energy could be disastrous for both the environment and world peace.
