If we assume that current daily production of 82 million bbls/day (31 billion bbls in 2005) increases at 2.5% per annum and the current global oil reserves of 1200 billion bbls is not replaced by any additional oil, then oil will be exhausted by 2031. However, this is a gross simplification because:
However, it is also possible the amount of oil reserves is overstated, particularly in the Middle East - this is quite uncertain because many of the countries with the biggest oil reserves do not allow external auditors to verify reserves numbers. Banks are not required to audit these reserves because the countries have self funding state run oil companies - they do not need to justify investments to external funding entities. It is thought by some that reserves might have been increased over the years to allow for higher OPEC quotas when these were more important in the 1990s, though this is speculative - it might also be the case that with the latest oil technologies (water injection, missible gas injection, 4D seismic, multi-lateral wells) - reserves could be understated.
One thing is well known - the easy oil has been extracted and boosting oil production will require massive capital investment. Even the wealthy oil producing nations will be reluctant to invest such sums - most likely prefering instead to expand their social welfare systems and reduce unemployment. Whether oil production growth can keep up with demand growth from the Far East is a key question - in the next decade - China and India's growth in oil demand will likely lead to political and economic tensions - as these tow new large oil importing nations compete globally for depleting oil reserves and production capacity.
The days of $20/bbl are almost certainly behind us - expect a base level of $40/bbl - with potential for prices to rise above $100/bbl if tensions increase or supply is significantly disrupted.
|Oil demand per year MMM bbls||31||31.8||32.6||33.4||34.2||35.1||36.0||36.8||37.8||38.7||39.7||40.7||41.7||42.7||43.8|
|Cum oil production MMM bbls||31||63||95||129||163||198||234||271||309||347||387||428||469||512||556|
|Oil demand per year MMM bbls||44.9||46.0||47.2||48.3||49.6||50.8||52.1||53.4||54.7||56.1||57.5||58.9||60.4||61.9|
|Cum oil production MMM bbls||601||647||694||742||792||843||895||948||1003||1059||1116||1175||1236||1298|