The next oil price shock: preparing for the inevitable

The depletion of the world's oil reserves was discussed. The evidence for a future oil crisis was derived from an assessment of the underlying resources, combined with estimates of demand. To understand the future production of reserves, data on the amount of oil already produced, known reserves, the depletion rate, the spurious nature of reserve estimates, reserve to production ratios, depletion patterns, oil prices and swing ratios, rate of discovery of new resources, and drilling rates were examined. According to this author, world annual consumption total 23 Gb a year, whereas new discoveries amount only to 7 Gb. Also, 90 per cent of today's oil production comes from fields more than 20 years old, and 70 per cent from fields more than 30 years old. Extrapolating from such data, the scenario for the inevitable price shock is constructed