According to BP’s Statistical Review of World Energy (pdf), released on wednesday, we still have 1,333 billion barrels out there to pump, enough for 40 years at current usage. Great – nothing to worry about right now… if you believe BP. According to Jeremy Leggett, BP’s chief economist literally laughed off a question about peak oil at the launch press conference.
So do we breathe a sigh of relief, or do we join Britain’s former chief scientist in saying ‘pull the other one’?
Even a cursory browse might put you in the latter camp. Consider for example, that Saudi Arabia single handedly accounts for almost 20% of the world’s oil reserves. The details of how much is in each field is a state secret, but it claims to have 264 thousand million barrels. This is a little strange, since it reported that it had 262 thousand million barrels ten years ago, and 260 in 1989. Saudi Arabia has pumped around 8 million barrels of oil a day for twenty years, but its proven oil reserves have gone up rather than down.
Since Saudi Arabia hasn’t announced any major discoveries in that time, its stated reserves are scarcely credible. When Colin Campbell attempted to work out an honest figure in 2006, he concluded that the real figure was probably closer to 159.
Kuwait claims 101 thousand million barrels, 4 more than it said it had in 1989. So where on earth have its 2 million barrels a day been coming from? The United Arab Emirates’ estimate is unchanged in a decade, still at 97.8 after ten highly productive years. Essentially, there is either something magical happening under the sands of the gulf, or somebody is telling lies.
The answers lie with OPEC, which seeks to control the global oil price by agreeing limits to oil exports. It sets quotas according to stated reserves – the more you have in the ground, the more you’re allowed to sell each year. As Matthew Simmons says in his book Twilight in the Desert, this gives member countries every incentive to overstate their reserves. They would be punished, economically, if they told the truth.
Take a look at the graph of stated oil reserves below, and see if you can tell which year OPEC switched to a quota system.
OPEC switched to quotas in 1985, and the following year its members had miraculously discovered billions more barrels that they didn’t know they had. Those figures have never been clarified or revised. The fact that Kuwait’s figures are decided by a closed session of the Kuwaiti parliament, rather than an oil company or an independent auditor, tells you everything you need to know. But there’s no need to pick on Saudi Arabia or Kuwait – looking through this year’s BP statistical review, it’s notable that not a single OPEC country has reported a fall in its reserves in the last 10 years.
In short, global oil reserve estimates are fictional. We have no idea how much we have, because it doesn’t pay to tell the truth when it comes to oil. It doesn’t serve OPEC, and it doesn’t serve politics either, which is why no government questions the figures.