On March 5, the New York Times published a front-page story called “Oil Innovations Pump New Life Into Old Wells.”  Getting new oil from “played out” wells was the thrust of the piece; as the price of oil rises, it becomes worthwhile investing new money into old wells.  The article also indirectly took on the “peak oil” debate.

Conventional wisdom has long held that the Earth has two trillion barrels of oil.  There’s consensus that we’ve drilled, pumped and used about one trillion barrels of oil, which has led some to speculate that we will soon pass over global oil’s “peak” and demand will soon outstrip supply, if it hasn’t already.

The Times article pointed to a 2000 U.S. Geological Survey estimate that put total recoverable oil at 3.3 trillion barrels, which if true, would give us all some breathing room.
An extra trillion barrels, however, is small reason for comfort in light of a 2005 report commissioned by the Department of Energy.  “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” – commonly called “the Hirsch report” after its principle author, Robert Hirsch – predicts it will take 20 years of preparation to avoid an economic crisis caused by peak oil.  At current consumption rates, it would take us only another 10 years to pass the peak of a three trillion-barrel supply.

Riding to the rescue is Daniel Yergin of Cambridge Energy Research Associates, the energy consultants the Bush administration and oil companies would like you to believe.  He tells us there are actually 4.8 trillion barrels of recoverable oil on Earth, which means we’ve only used a bit more than 20 percent of what we’ve got.  Hooray!  (A statement that startling deserves to be on the front page of the New York Times.  It also deserves a follow-up question, to learn how Mr. Yergin arrived at such a bodacious figure, but the Times remains silent on that point.)

If Mr. Yergin’s right, the oil peak is some 30 or 35 years away and we don’t even have to start making the preparations Mr. Hirsch recommends for another decade or so.  When we consider that England has just promised to cut CO2 emission by 60 percent in the next 40 years (and other global warming-aware countries might follow suit), maybe oil consumption will actually decrease and our supply will last even longer.  Wow!  Whaddya think?  Maybe we should all buy new Hummers.

Or not.  One thing everyone agrees on is that we won’t know we’ve past the oil peak until after its happened, because every nation that has oil has reason to lie about how much it has.  Predictions, even from bright people like Mr. Yergin, involve substantial guesswork.  The numbers you don’t have to guess are the actual barrels brought to market and used.

The federal Energy Information Administration (EIA) tracks global oil production and consumption.  (See below for information on where to find these numbers.)  Their charts show both demand and supply have been rising in recent years.

Oil supplies increased by an average of 2.61 million barrels per day in 2003.  In 2004, supplies increased by 3.43 million barrels per day and in 2005, oil supplies increased by 1.56 million barrels per day.

The final 2006 figures were released the same days as the Times article; the oil supply increased by an average of 30,000 barrels per day.  That’s a small increase, far less than one would expect after reading the Times’s description of renewed pumping from old wells or Daniel Yergin’s 4.8 billion-barrel prediction.

In fact, if you look closely at the spreadsheet, you’ll see that due to Hurricane Katrina, U.S oil production dropped by a million barrels per day in the fourth quarter of 2005.  If not for Katrina, 2006 production might have been lower than 2005.

The EIA has yet to print consumption numbers for 2006, so we don’t know if demand exceeded supply, but I think skepticism is still called for; a visit to the Hummer dealer is not.

© Mark Floegel, 2007

(EIA oil data: http://www.eia.doe.gov/oil_gas/petroleum/info_glance/petroleum.html.  Scroll to the bottom of the page and under the heading “International Data” click on the Excel spread sheet entitled: “World Oil Balance.”)