[Pops]

Graeme posted this article elsewhere to show we about to rocket into renewables but I wanted to talk about something else..

In the US, for example, production as a percentage of total reserves has dropped from nine percent to six percent over the last three decades.

I saw this story earlier and this bit struck me, so I put it on a chart. Note that the axis aren't zeroed, I tried to match the two lines in 1980 to see the trend...



from BP review 2011

[Pops]

Most of us realize that higher priced oil doesn't literally create more oil, it just makes more expensive to extract oil profitable.

I hadn't made the connection quite concrete enough until I did this chart:




Notice that in 1998, the price was at a low ebb and so were reserves. Notice also how 10 years later in 2008 a price 6 times higher hasn't done much except flatten the reserve decline.

.

[SeaGypsy]

Funny how an upward trend is perceived by a market desperate for signs of life.
Of course vested interests (such as the current POTUS) will crank and overcrank the spin in the numbers as best they can. The average mug on the street thinks.

.." the US' is floating on a self replenishing sea of oil and global warming is a Euro conspiracy to globalize tax and lefty government agendas, aside from the fact we don't even really need oil, we just like the sound of NASCAR so much we're too busy enjoyin' larf to bother fussin 'bout the fact that Tessler feller had it all figured out for free unlimited energy, before they diagnosed him nuts and locked away his patents in the vaults of big oil"

[Plantagenet]

Some of the increase in reserves since 2000 probably also reflects the new oil reserves proved up in the Bakken and other shales where frakking now allows oil production.

[Keith_McClary]

"Reserves" is usually claimed to mean "economically recoverable".

But many countries (eg. OPEC) have the same "reserves" of $100 oil as they had of $10 oil.

[Cog]

There is probably some price at which you could get reserve growth from including coal and oil shale into the equation, since those can be turned into liquid fuels. But it is at any price that anyone could afford?

I think not.

Real economic growth in the OECD countries is having a problem with +$100/bbl oil as it is.

[SeaGypsy]

Hence Joe & Yo will be meeting up sooner than later...

[Cog]

Hence Joe & Yo will be meeting up sooner than later...

Please postulate an alternative ending to the story. I'm not liking the ending to this one.

[Tanada]

In reality if you maintain a high price long term as we have been the last 24 months alternative means of producing fuel become more attractive. A gas to liquids plant starting with Natural Gas and making Gasoline or Diesel would be price competitive now, but the investors are gun shy that if they build it someone will release vast quantities of oil into the market and bankrupt them. Several big players had massive investments in alternative production in development in 1986 when SA crashed the price on the world market and made those investments worthless.

[SeaGypsy]

That overlooks Cog's point. $100-$110 is NOT too expensive for developing world growth, whilst being nowhere near break even oeverall in the developed world. The price will stay up apart from minor downturns. Average here on in is $90+ even if the 1st world went completely zombieworld tomorrow.

[MD]

"Reserves" is usually claimed to mean "economically recoverable".

But many countries (eg. OPEC) have the same "reserves" of $100 oil as they had of $10 oil.

Perhaps they were astute enough to estimate their total economically recoverable reserves fifty years ago.

Seriously, Higher price does equate to higher reserves. We won't buy as much though because it will be too expensive to frivolously waste as we've been doing for the past 100 years.

The primary outcome of peak oil: We won't use it as usual. Say goodbye to the auto age as we've known it.

[seahorse3]

Good post and charts Pops, thanks