A Short And Sweet Update On Oil

According to Professor Vaclav Smil, (2002) “Most discussions of the earth’s energy resources and their use by modern societies betray a widespread lack of scientific literacy, and abound in misinformation, biases, and proffers of dubious solutions driven by various special-interest agendas.”

I agree, but at the same time I think that this magnificently perceptive observation is blemished by that scholar later referring to oil pessimists as “Cassandras”, and then  heavily endorsing such things as an evaluation of global oil  reserves by the United States Geological Survey (USGS), which estimated that undiscovered  conventional oil reserves were plentiful, and 20 percent or higher than that agency’s previous assessment, which for me immediately leads to the question of how those ladies and gentlemen arrived at the estimate of 20%.

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If you want or need to investigate that and similar issues, then you might be interested to know that my new book ENERGY AND ECONOMIC THEORY (2015) is now available, but everybody – to include myself – should examine and try to keep in mind a few numbers that I intend to present and examine in my next book. (It can be added that in Greek mythology, Cassandra, the daughter of Priam, actually possessed the gift of prophecy, but it was her fate never to be believed. For some reason, her name has come to mean someone who predicts misfortune.)

Proved global oil reserves amount to approximately 1.5 trillion barrels, remembering that  a trillion is a thousand billion. As noted just below, the Middle East has a large share of these, which means that OPEC has more, and perhaps much more. I can also point out that recently Russia expressed a willingness to discuss oil pricing with OPEC, since that country and Saudi Arabia are the largest exporters of oil in the world. In 2014 World Proved Reserves in billions of barrels were as follows.



Saudi Arabia  (267.0) Venezuela  (211.2)



Canada (173.6) Iran (151.2) Iraq (143.1) Kuwait (104.0)



United Arab Emirates (97.8) Russia (60.0)



Libya (47.1) Nigeria (37.2) Kazakhstan (30.0) United States (26.5) Qatar (25.4)



China (20.4) Brazil (14.0) Algeria (12.2) Mexico (10.4)

Saudi Arabia and Russia are the largest producers, with perhaps 10.5 million barrels a day (=10.5 mb/d), and where the future is concerned, I believe it likely that Russia will find much more oil and natural gas, especially offshore its northern border, where a large ‘strike’ was recently made in cooperation with the American firm Exxon Mobil. Incidentally, on average, one tonne (= 1 metric ton =1t) of oil is 7.33 barrels. (I mention this because one often sees tonnes instead of barrels.)

World oil production/consumption as this is being written is about 90 mb/d, and OPEC accounts for roughly a third of global output. The U.S. consumes approximately 18 mb/d of ‘liquids’ (of which 9.5 mb/d is domestic crude oil , and about 2.5 mb/d ethanol, natural gas liquids, etc), while 6-7 mb/d of these items are imported. (China is now the largest crude importer, with the U.S. in second place).

The U.S. crude oil output is growing now because of the ‘shale boom’, but predictions can be found that this U.S. growth will cease about 2019, with total crude output about 12 mb/d. U.S. imports at that time are estimated to have declined to about 3-4 mb/d – which may or may not be true –  but it has been suggested that they will begin increasing, which I also happen to believe. (And in case you have forgotten, the hydraulic fracturing ("fracking") that has brought about what is called ‘the shale oil revolution’ features pumping water, chemicals and sand through a horizontal oil or gas well under high pressure to break open channels (fractures) in the reservoir rock. The sand grains hold those channels open, allowing the oil  natural gas to flow to and exit via the well bore hole.)

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BreakingBad News 6 years ago Member's comment

!I'm holding 300shrs VBLT @5.95. Going to have major profit on this one today!