Understanding Oil Reserves per Person

When people ask 'How many barrels of oil are left per person?' it can lead to some interesting conversations. The simple answer might be as many as you can afford. After all, oil reserves are not static figures but can change based on market conditions, technological advancements, and other variables. Let’s delve deeper into this topic and explore the complexities of oil reserves and how they are estimated and utilized.

The Current State of Oil Reserves

According to reports, the world currently holds 1.7 trillion barrels of estimatable and recoverable crude oil. With a global population of approximately 7.8 billion people, this translates to about 218 barrels of oil per person. However, this figure is often misleading and does not reflect the full picture of oil reserves.

Achieving Comprehensive Understanding

This is a trick question. The true answer is 'As many as you can afford.' The concept of oil reserves encompasses far more than just the known quantities of crude oil. As the price of oil fluctuates, more and more reserves become economically viable. Let's look at a notable example: the Tar Sands in Canada. These reserves were not considered in the world's reserve totals until the price of oil surpassed $50 per barrel. Similarly, the Clinton Formation in Ohio, a thin pay zone, has the potential to become economically viable with a higher oil and gas price.

The Role of Technology and Economics

Estimates of oil reserves are made by petroleum engineers and geologists, who tend to be conservative by nature. This is due to the penalties they face if their estimates turn out to be overoptimistic. When these estimates are used to secure loans for development, and if the actual reserves do not cover the loan, the bank can sue the estimators. This practice often results in very conservative estimates. This is also true for many other hard rock minerals like copper, lithium, uranium, and tantalum.

Challenges in Estimating Reserves

The process of estimating oil reserves is not straightforward. Adding up all the 'known and proven reserves' and then dividing by the annual worldwide consumption to determine 'how many years are left' is a highly inappropriate use of the data. This method is commonly used by people promoting oil and mining investments as well as those trying to secure more funding for research.

The UK Example: A Cautionary Tale

A few years ago, a group at one of the two best known universities in the UK published a report on 'The world running out of minerals.' The report used the simple division methodology mentioned above but without a proper understanding of geology, extraction technology, or economics. The report, along with the 'academics' who produced it, seems to have vanished. There are a few key elements where there are real problems, such as cobalt (70% from one area in the Congo, which has had warfare for 50 years), platinum group metals (mostly from South African mines near end of life with serious labor issues), and rhenium, which is critical for jet engines and notoriously hard to find.

Moreover, elements that are byproducts of other mining, such as gallium and indium from copper mining, can soar in price if the demand for these elements increases while copper mining declines.

Conclusion

Oil reserves per person is a complex and multifaceted issue. While the figures may seem straightforward, the reality is that they can vary widely based on economic conditions, technological advancements, and market dynamics. Understanding the true state of oil reserves requires a deeper look into the economic and technical realities of the industry.