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When it comes to the subject of whether the world is running out of oil- just type in the following phrase into any search engine and see how many mainstream news outlets have reported on the subject of "peak oil" in the past six months.
No longer are stories on the subject found on alternative/conspiracy web sites. The mainstream is now reporting on the problem.

Yet surprisingly- the governing class doesn't seem to be paying attention.

Is There Really A Shortage of Oil In The World?

Is the world really running out of oil?

No, but it is most definitely running out of cheap oil.

After surveying the views of the world's leading experts in the field of monitoring and tabulating the world's petroleum supplies- the magnitude of the problem and the complexity of the solution (if there are indeed solutions to this dilemma at all) become clear.

For instance, for new sources of oil to be identified and extracted out of the ground- the price of this important commodity will have to rise- as most of the "cheap oil" that could be taken out of the ground and sold for $20-30 a barrel- is gone. Consumed. The era of cheap oil is over.

What comes next is a steady increase of the price of oil until this new price renders it profitable for the explorers and producers to take it out the more difficult source from the ground. This is inevitable and no amount of investment in alternative energy development or reduction in current consumption is likely to alter this basic fact.

The major question is when does demand begin to seriously outstrip supply and production/extraction peaks that causes huge price hikes?

The experts and other important people we ought to be paying more attention to

Who is saying the world is running out of cheap oil? Only some of the world's leading experts and executives in the oil industry. They include:

M. King Hubbert: While working as a geophysicist with Shell Oil Company in the 1950s he was the first to calculate oil production peaks and claimed the US production would peak in 1970. He was right. It did.
Walter Yongquist: Has observed petroleum and alternative energy sources in 70 countries working for Exxon Corporation and as a consultant to Sun Oil, Shell Oil, and Amoco. He claims the decline in the amount of energy recovered in the US compared to energy expended was 28 to 1 in 1916. Today it is 2 to 1, and dropping. He has shown that by 2005, the cost of extracting a barrel of oil in the US will be a barrel of oil which means no company will find it profitable to conduct oil production in the US.
David Goodstein: Professor of physics and vice provost of the California Institute of Technology. In his just-released book, Out of Gas: The End of the Age of Oil, he argues that the worldwide production of oil will peak within this decade. That will be followed by declining availability of fossil fuels that could plunge the world into global conflicts as nations struggle to capture their piece of a shrinking pie. Globally, nature left about 2 trillion barrels beneath the ground, and the peak will occur when we reach the halfway point, he claims. Since we have used close to a trillion barrels, the peak can't be more than a few years away.
Mike Bowlin: Chairman and CEO, ARCO: In 1999 he remarked: "We've embarked on the beginning of the last days of the age of oil."

Dr. Colin Campbell: In his report The World Oil Supply 1930 - 2050,states: "The major oil companies are merging and downsizing and outsourcing and not investing in new refineries because they know full well that production is set to decline and that the exploration opportunities are getting less and less. We have depleted most of our high-quality resources; the supply obtainable from low-quality deposits is largely limited by the supply of fuel; and the supply of fuel itself is bound by these constraints."

Analysts at Douglas-Westwood, a UK-based energy industry consulting firm: "The world is drawing down its oil reserves at an unprecedented rate, with supplies likely to be constrained by global production capability by 2010. Oil will permanently cease to be abundant. Supply and demand will be forced to balance- but at a price. The world is facing a future of major oil price increases- which will occur sooner than many people believe."

Professor Kenneth Deffeyess: geologist and Princeton University professor and author of Hubbert's Peak: The Impending World Oil Shortage: "After the peak, the world's production of crude oil will fall, never to rise again. Developing alternative energy sources on a large scale will take at least ten years. In the meantime, there will be chaos in the oil industry, in governments and national economies."

Richard Heinberg: Author of The Party's Over: Oil, War and the Fate of Industrial Societies: "For the next half century there will be just enough energy resources left to enable either a horrific and futile contest for the remaining spoils, or a heroic cooperative efforts towards radical conversation and transition to a post-fossil-fuel energy regime."

Dick Cheney: Current Vice President of the US. In late 1999 when he was chairman of Haliburton Oil, he told the International Petroleum Institute in London: "There will be an average of two percent annual growth in global oil demand over the years ahead, along with, conservatively, a three percent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. This is equivalent to more than six Saudi Arabias' of today size."

The basic facts about oil production and consumption:

In 2002, the world produced slightly more than 66 million barrels of oil a day. It consumed about 76 million barrels a day- 25-27 billion barrels a year. The problem is that only around 7 billion new barrels a year are discovered.

Global demand for oil is currently rising at more than 2 percent a year. Since 1985, energy use is up about 30 percent in Latin America, 40 percent in Africa and 50 percent in Asia. Energy demand is expected to rise by about 50-60
percent over the next 20 years to 112 million barrels a day; 40 billion barrels a year.

According to the United States Geological Survey's latest report published in 2000, the world's proven oil and gas currently stands at about 2.5 trillion barrels. A calculation using data from the Centre for Global Energy Studies shows that with 28.8 billion barrels currently being consumed per year (79 million a day), there is some 80 years of supply left in the ground. However, the 2.3 billion barrels remaining includes 1.4 billion barrels which, according to United States Government Statistics (USGS) analysis of global geology, exist but have yet to be discovered. That leaves roughly 890 billion barrels of oil and gas that has already been discovered and are booked as proven reserves –about a thirty-one year supply.

So when will the global production of oil peak?

Colin Campbell says it will occur before 2010. Kenneth Deffeyes believes the date will be in the coming two years. The US Geological Survey, a Denver-based group that tracks petroleum resource use, says the production will peak between 2011-2015. The U.S. Energy Department believes that it won't happen until 2037. The French oil company Total-Fina-Elf has said it believes the year will be 2010.

How much petroleum reserves get replenished each year?

If the oil industry was replacing the consumed oil with new sources of oil- the world wouldn't be running out of oil. Clearly, that isn't happening. Estimates differ on how wide the gap is between consumption and new sources of oil- ranging from one new barrel of oil for every one the world consumes to one barrel for every four that is consumed.

World oil and gas production from existing fields is declining at an average rate of 4 to 6 percent a year. To meet projected demand in 2015, the industry will have to add about 100 million barrels a day of new production. That's equal to about 80 percent of today's production level. In other words, the oil industry will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every ten barrels being produced today. That means new oilfields that can produce 60 million barrels per day. As a comparison, six million barrels per day are produced from the North Sea.

The question is where will we find ten new regions the size of the North Sea in the next ten years or so?

Says Michael Smith of the UK consultancy firm, Douglas-Westwood: "There are about 95 countries that either produce oil now, have produced it in the past, or will produce it in the future. Half of those, including the US and Russia, are more than five years past their production peaks."

Joe Thompson, the president of Exxon Mobil Exploration Company, contends:
"By 2015, we will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every 10 barrels being produced today."

In its 1999 report on the world's oil supply Goldman Sachs said that the rig count over the last 12 years has reach bottom. This is not because of low oil price. The oil companies are not going to keep rigs employed to drill dry holes. They know it but are unable and willing to admit it. The report remarked: "The great merger mania (of oil conglomerates) is nothing ore than a scaling down of a dying industry in recognition that 90% of global convention oil has already been found."

Claims Colin Campbell: "It is important to realize that spending more money on exploration is not an answer. After the price of crude hit all-time highs in the early 1980s, explorers developed new technology for finding and recovering oil, and they scoured the world for new fields. They found few: the discovery rate continued its decline uninterrupted. There is only so much crude oil in the world, and the industry has found about 90 percent of it."

Says Professor Goodstein of the California Institute of Technology: "Better to believe in the tooth fairy than in future supply of new sources of oil. Most of the planet has been explored extensively, and even if some new fields are found, they won't delay the peak by more than a few years."

Where are the existing resources of petroleum?

According to a study by the United States Government in 2000 (the USGS World Petroleum Assessment www.usgs.gov) OPEC's proven and undiscovered reserves is about 850 billion barrels with non-OPEC reserves equaling about 750 billion barrels. One of the world's leading consultancy firms in this sector, Petroconsultants, puts proven reserves for the world at 850 billion barrels. The Oil and Gas Journal believes in 2002 it was 1213 billion barrels.

A team of researchers from Sweden's University of Uppsala led by Professor Kjell Aleklett, president of ASPO (The Association for the Study of Peak Oil & Gas) claims that world oil reserves are up to 80 percent less than predicted. The Upsala team says that there are about 3,500 billion barrels of oil left in the ground.

In the December 23rd, 2002 edition of Oil and Gas Journal, the trade publication gave these numbers for the world's oil known reserves (in billions of barrels)

Saudi Arabia 259
Canada 180 (including tar sands)
Iraq 112
Kuwait 94
Iran 90
Venezuela 78
Russia 60
US 22 (pasted peak production in 1970)
China 18
Norway 10 (past peak production)

The Problem is that many of the world's largest oilfields are aging. According to the Colorado School of Mines, the world's 120 largest oilfields produce about 33 million barrels a day- almost 50% of the world's supply. The fourteen largest produce over 20%. The average age of these 14 largest fields is 43.5 years. From 1996 to 1999 more than $400 billion was spent on finding enough oil to replace existing oil supply sources to keep production stable at 30 million barrels. In the following three years another $150 billion was spent which grew production only another 600,000 barrels. During the decade of the 1990s, 42 billion barrels of new oil reserves were discovered while the world consumed more than 250 billion barrels. In the past twenty years only three oil fields containing more than one billion barrels have been found- none of which produce more than 200,000 barrels a day.

The political implications of a world no longer awash in cheap oil:

So if the world is definitely running out of cheap oil- and not replenishing what it is consuming- what are the geopolitical implications of this?

This is the 60,000 question that few mainstream media sources will unlikely confront as the answers are not at all comforting.

For instance, not doesn't need to have a Ph.d in international affairs to understand how any future superpower needs to control whatever sources of cheap oil are left in the world if it is to remain a superpower. Today the US consumes one-seventh of global oil production and currently imports 15-20 million barrels of oil a day- 60% of total consumption. That country obtains only 18% of its imported oil from the nations of the Middle East. By 2020 the US will have to import more than three quarters of its total energy demand-most of that will come from the Middle East.

Domestic oil production in the US will decline from 8.5 million barrels per day in 2002 to 7 million barrels per day in 2020- while consumption will rise from 19.5 million to 25.5 million barrels. Thus don't buy into the moralist arguments the spin masters at the White House spew out for the reasons the US invaded Iraq such as "weapons of mass destruction". Oil is at the center of US foreign policy because any superpower that wants to remain a superpower for long will do whatever is necessary to ensure this goal- including invading countries to control (not seize, control who gets what- there is a difference) their oil supply.

While Russia has nowhere near the consumption needs of the US- it does have about 60 billion barrels of proven resources, about enough to supply the world for less than two years. There are no more significant quantities of oil to be discovered inside of Russia.

West Africa states accounted for only 10% of global oil production in 2000- however the US Department of Energy reckons that this share will increase to a full quarter of world production by 2020. The countries involved are Nigeria, Guinea and Angola. Look for the US to establish closer military ties to these nations in the years ahead. Ditto for Mexico as Mexico's reserve base is about 25% larger than the US.

The big wild card in global oil supplies is the Caspian Sea. At the bottom of the Caspian Sea there exists the world's biggest untapped fossil fuel resources with estimates ranging from proven reserve of 35-40 billion barrels. Some experts such as Colin Campbell and Jean Laherrere dispute this figure and claim there could be as much as 50 billion barrels of oil- not of very high quality- about the same as the North Sea- but nowhere near the earlier predictions of 200 billion barrels. The region could be providing the world with 6 million barrels a day by 2015.

Hence the intense political activity in the region. The US and Russia are competing to exert its dominion over this region- with pipelines: the US wants to build one from Turkmenistan through Afghanistan to the Indian Ocean. (Viewing US foreign policy in light of its need to secure cheap sources of oil, one has to wonder whether this was the actual reason for invading Afghanistan- rather than capturing Ben Laden- which of course they never did)?

British Petroleum is building a $3.8 billion pipeline from Baku in Azerbaijan via Georgia to Turkey's Mediterranean port of Ceyhan. With 500 elite US troops in unstable Georgia, the US favors this route. The Russians want to construct a pipeline across its territory from Chechnya via the northern Caucasus region. The Russians will soon station its troops in Kyrgyzstan- about 50 kilometers from a US airbase. The US also has a military presence in Uzbekistan. Russia offers military and financial aid to its allies in the region and the US does the same.

The third factor is China whose demand for oil overtook Japan in 2003 to become the world's second largest consumer of oil. Its fuel imports are rising by 9% a year. China was self-sufficient in oil until as recently as 1993. Now, of course it's depending more and more for its oil supply on imports and increasingly that is going to have to come from the Persian Gulf. The Chinese are heavily dependent on oil supplies from Sudan and as a result they've developed close military ties with the Sudanese government. They seek oil in Kazakhstan and they are trying to strengthen their military ties with that country so they can construct an eastbound pipeline from Kazakhstan to China.
Thus China, Japan, Western Europe and the US will all be competing for the same access to the same supplies of oil. Unlike other commodities- oil has political significance and implications- none of which should be lost on anyone viewing world affairs in the coming decades.
The end result is a basically a reply of "the Great Game" scenario of the 19th century. While wars in the that century were fought over valuable minerals and control of the world's sea routes- wars in the 21st century will likely be fought over access to increasingly scarce sources of petroleum. We have already seen the first war in this new century waged over the need to control the planet's last remaining sources of cheap oil. It undoubtedly- will not be the last. As oil supplies become scarce the world will become increasingly unstable (good news for all your gold bulls out there).
Regardless of how geopolitical events take shape- nothing can be done to alleviate the upcoming peak production of oil. Alternative energy sources are a nice idea- but even if the advanced nations of the world got fully behind these initiatives- it would take decades to see a meaningful decrease in oil consumption. Also, regardless of how sexy some forms of alternative may sound on paper- it is highly unlikely that even in 50 years- the world will no longer need petroleum products.
Whatever happens one outcome is clear: oil will become increasingly more expensive as the years pass- and that the era of cheap oil is well behind us. Nothing in the short-term can be done to forestall this inevitable rise in price- or impending shortage of supply. Best to learn to accept it and adapt- because there is no alternative on the horizon to a world where energy prices will only rise in price.