Recently, someone proclaimed to me that ”there is no oil shortage” and ”there are plenty of oil reserves yet to be found”. One oversight seems to be the decline factor. When Oil and gas reserves are discovered, the amount of oil or gas that is or will be produced is finite. No matter how large or small the estimated reserves are, they won’t last forever. If they did, we could just drill wells and sit back and go on producing each one forever. Not so in the real world. Saudi Arabia discovered huge oil fields in their desolate desert sands with the help and guiding hand of American know how as far back as the 1950’s. And they were truly huge discoveries. By some estimates, they have produced, sold and distributed over 200 billion barrels of oil so far. But how much is left? Another 200 billion or another 10 billion or 1 billion? One can only estimate. The fact is, reserves need to be replaced as they deplete. Oil is in the ground and is expressed as a finite number. Period. With oil consumption worldwide on the rise and production in the world’s largest fields in decline, you’d better start findind large reserves quickly to replace declining production. The combination of the two is a delicate balance that has to be reckoned with. Those of us in the know understand that it can be achieved using technology, experience and a ”get it done attitude.” Also important is management of resources. Conservation is always good. Factors concerning ‘refining the existing supplies’ for gasoline usage makes up a major percentage of nationwide (and worldwide) oil consumption. Making diesel fuel, electricity generation, and many other uses makes oil a valuable commodity. But use it wisely. For example, use high grade API oil or condensate that is specifically good for making jet fuel or gasoline to make those products. That will keep our vehicles moving which is the single most largest consumer of the oil used in the United States. High grade oil can also be used for electricity generation as well, but, natural gas or clean burning coal can also be used to generate electricity but can’t be used for making gasoline or jet fuel. In other words, certain energy products are better suited for specific purposes where others are not. Hence you are using the existing supplies as efficiently as possible.
When it is all said and done, the gurus of guess argue that $100. a barrell oil is only a few months away. Any disruption from the crazies of the world could also trigger that price. Consumption is rising from now to the end of the year by 3.6% because of seasonal shifts. Demand is alive and well in China and India’s economies, creating even more demand. Simmons International’s chairman was recently quoted as saying ”Oil prices could triple in three months to more than $200 dollars a barrel, given the right circumstances”.
So what should we do? One may conclude, drill more wells.