When will the world run out of oil?

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Term Paper

Socio-economic geography

Semester I

When will the world run out of oil?

Vugar Ahmadov

21.11.2012

Nearly 70 million of barrels of oil are produced by oil pumps across the world in one day, but the main question arising from it “When the world will run out of oil?“. The purpose of the research is to indentify how more the source of powers such as oil can be extracted from oil towers and sea platforms and analyze the number of barrels extracted in the past 8 years. The procedure of research is carried by analysis of documents provided by the world's leading oil companies such as Exxon Mobil, Shell, BP, Gazprom OIL and SOCAR. This document provides information and data about oil extraction in oil dominating industry countries such as Persian Gulf countries, USA, Russia and Azerbaijan. According to NationMaster in co-operation with RosNeft, Russia has increased its oil producing power by 2,3 millions of barrel per day in 9 years becoming one of the world leading oil producing countries. This is explained by excess demand on petrol across the world for transportation needs. The most well known theory of when will the world run out oil is Hubbert theory, with introducing his graph. Using empirical research , it was hypothesized that countries of Persian Gulf have reserves of oil mostly for 250-260 years( taking in consideration undiscovered places), if assumed that no new deposits will not be discovered as new sources of oil, referring that 23.2 million of barrel per day will be produced per day, which is indeed 28 % of worlds fraction.

For last two centuries oil has become the main source of energy vesting millions of dollars to countries economy. In modern society, the role of oil has increased enormously. Military equipment, peaceful transportation, power plants, equipment factories, heating systems - all this is driven by oil and gas. There is some concern, will be there enough oil to satisfy our needs? The rapid increase in energy demand has led to an equally rapid growth in oil and gas production. Saudi Arabia is recognized as the world biggest oil reserve country, accounting for just under half of all stocks of the Arabian Peninsula. It is followed by Kuwait, Iran, Iraq, UAE. In 1960, Arabian countries joined to form an organization of oil exporters called OPEC. It was later enlarged also by some other oil-producing countries (Nigeria, Venezuela, Indonesia) - all in OPEC includes 14 countries. OPEC countries have felt their force in 1971 in Tehran, negotiations held between OPEC and the "seven sisters" - the major oil companies, which led the development of resources of the Arabian Peninsula.

OPEC required to increase the tax in favor of exporting countries, to bring some more money into their growing economy. When the company wanted was to scare Arabic peninsula with military force, they respond does not take long time. Americans have been told that in the event of a military invasion, there will be blown up all the oil fields. This tactic proved to be successful. 33 days after the start of negotiations, American oil companies surrendered. . As a result of such events, capitalist countries faced the problem of fuel poverty. Oil prices rose sharply. In the U.S, for example, they have increased by 6-7 times. Due to lack of fuel, both in the U.S. and Western Europe had to reduce the number of flights, sharply reduced orders for tankers, fewer cars produced. That was first sign of “oil starvation". There is no secret that oil contributes to economic growth, and the decline turns slowdown. An example often cited the 2008-2009 crisis, when oil prices collapsed in a short time with a $ 140 to $ 40 per barrel, and world GDP dipped 7.9%. These all are indicators of how much today's economy depends on oil. Proved oil reserves on the planet are estimated at 1.188 trillion barrels. World oil consumption in the same day is 80.7 million barrels (Recall that the oil barrel - a measure of capacity, equal to 158.98 Liters). From this estimation we can calculate, for how many oil today's reserve can be enough for consumptions. Scientist call this time as “peak of oil . Other oil companies and academic institutions give different assessments onset of "peak oil", but more often they are in the range "over 25-70 years." The onset of peak oil does not mean the total depletion.

In the twentieth century, oil became extremely important for the global economy. How much oil in the world, scientists still cannot tell. There is known only to the amount of proven reserves. However, no one doubts the fact that the oil reserves are limited. Since oil is a non-renewable resource, sooner or later, its reserves are exhausted. Realizing that oil reserves are not infinite, scientists around the world are looking for ways to reduce power consumption and come up with ways to replace oil with renewable sources. Car manufacturers go to different lengths to reduce fuel consumption, and, it must be noted, that they do not bad. Increased use of alternative fuels such bioethanol, biodiesel, biogas. However, it allows only slow the very little of oil consumption. To work out work the oil consumption rate , Hubbert Peak Theory can be used.

But the real revolution occurred in the XX century, with the beginning of modern industrial civilization, a starting point which many attribute to around 1930. Then came the conditions for a sharp industrialization.The industrialized countries have to consume more fuel is burned in internal combustion engines, jet engines, then, and in the furnaces of power plants. And was the main fuel oil and products of its processing.Immediately after World War II, oil production is rapidly ripped up, but how long this situation could not continue and by 1970 occurred as slow. Energy crises of the 1970s with the sharp rise in oil prices and the recession of the early 1980's temporarily reduce its consumption.

In 1956, King Hubert introduced his theory about when each particular country will run out oil. Graph is bell-shaped, which implies an exponential growth in output at the initial stage, then a short-term stabilization, and finally, as a sharp decline in production up to the point where for a barrel of oil has to expend energy, equivalent to the same barrel. That is up to the point where further exploitation of no commercial sense. Hubbert tried to apply his method to analyze the effects of a larger scale, for example, the life cycle of production in the entire oil-producing countries.

Serious attitude to Hubert's prediction also contributed to the fact that in the last two years after his sensational statement, global oil production barely grew. It is difficult to say whether Hubbert was right or not. However, almost no one denies that the major oil and gas fields were discovered in the 60's of the last century, and the fact that in the last 20 years, geologists have time to find in the land of less oil than the oil time to deflate. There are many other disturbing facts confirming the correctness of Hubert. Hubbert report seriously alarmed the public and industry professionals, and the figure of the author of the theory has been the subject of heated debate. However, ominous Hubbert was absolutely accurate. The peak of oil production in the United States occurred just within those time limits, the legendary geologist who pointed out in his study. So when the last in 2006 the price of oil soared above $ 70 a barrel, many remembered another terrible prophecy Hubbert he made in 1956. Geologist said then that "the global mining (oil and gas) should reach a maximum in the next 50 years. The price of oil has reached the absolute maximum of just 50 years later.

While Europe was written off in big oil game long time ago, the history of the global oil industry was born in the Old World. Accustomed to 490 million tons of Russian oil production, it is interesting to read about the "breakout" from a million to a million per year in any European country. In fact, at one time, both France and Italy felt quite comfortable with such small volumes of crude oil. More oil just was not needed. The biggest ratio of oil is mostly concentrated in North Sea . It is still in active phase, but only feeding the United Kingdom and Norway. Oil and gas delivered to the UK mainly from the North Sea shelf, but the amount of fuel for a long time is not enough to cover the growing needs of the country. Only during the period from 2003 to 2004, the drop in production was more than 10%. According to the Ministry of Trade and Industry - total oil reserves at the beginning of 2004 amounted to 3,767 million tones, including proved - 3481 tons. Italy is just oil giant compared with France where situation with oil horrible. The annual production volume ranges between 4-6 million tons. Commercial oil production began in the country in the 50's of last century. Proven reserves of "black gold" is 85 million tons, which at current rates of extraction only enough for 12-15 years. Europe, having the largest energy companies in the world, has turned the whole world into its oil colony due to the fact that within the countries of the Old World there is no oil. BP, ENI, PKN Orlen, Gaz de france travel through the rest of the world in search of a really big oil.

Using historical method of research, it is possible to come up with the data which shows the rate of oil production across the globe, oil consumption , and estimated oil reserves. Oil companies keep their data in order to compare with new results, which give the clear picture of how they should plan their future goals. This also called review of documents. As an example British Petroleum , posted their annual report about Azerbaijan Oil industry , which indicated that in 2011 , Azerbaijan increased their production power by 8% , which further kept their place in top 15 oil production countries. Data collected for is oil is usually measured in barrels , or barrels per day if data collected is about oil production and oil consumption. Most of the data is expressed in quantity data, as it expresses information in numbers. Table graphs are used to compare outcome with previous years.

Oil prices are continuing to rise. People wonder how many years left until the exhaustion of oil reserves of the Earth by hundreds of millions of cars and thousands and thousands of aircraft worldwide. For example, a Boeing 747 to take off should be filled with 85 tons of fuel, and the supersonic Concorde jet requires 96 tons. Today, electric vehicles have appeared, but it seems a long way from the electric aircraft to fly in the sky. World average daily consumption of crude oil increases very rapidly. In 1996, it accounted for more than 70 million barrels a day. The Organization of Petroleum Exporting Countries (OPEC) makes the assumption that by 2020 the world will consume daily 100 million barrels (one barrel - 159 liters). The price of oil is one of the most influential factors of oil consumption.

The graph provided by OPEC clearly shows that from 1996 to 2008, prices are sharply rising and then from 2008 to 2009 it sharply falls due to world economy crisis when price fall down form 94.45$ from 44.66$ per barrel. This drove world crisis followed by massive losses of jobs in USA and in Europe. Most of countries are still struggling after world crisis , these are Greece and Spain. It all started on January 15. Information about the dramatic decline of the banking group Citigroup profit led to the fall on the New York Stock Exchange. Index Dow Jones industrial activity fell by 2,2%, Standard & Poor's - 2.51%. Nasdaq Composite lost 2.45%. January 21-22 was announced the start day global stock market crisis. Many leading oil companies such as NASDAQ was on the edge of bankrupt due to massive fall of their stocks. Immediately most of European countries responded, prices of petrol flew up , declined salaries , according to Eurostat , the consumption of oil declined in comparison with 2008.

Biggest oil reserves - about 25% of world reserves - are in Saudi Arabia. Proved oil reserves in this country is more than 262 billion tons. Venezuela has the second largest oil reserves in the country in the world. The volume of its proved reserves is about 211 billion tons of oil (11% of the world), predicted - according to various estimates, between 250 and 3000 billion. According to the latest annual statistical survey published in June 2003 by the oil company BP, the proven reserves are 1.047 trillion barrels with the current rate of oil reserves it will last for 40 years. According to the same estimates, natural gas reserves should last for 60 years, coal - for 230 years. But if you look at the situation more realistically, given the growth in energy consumption in the world, the current oil reserves would last only 30 years, and gas - for 40 years.

1 Saudi Arabia 262,600,000,000

2 Venezuela 211,200,000,000

3 Canada 175,200,000,000

4 Iran 137,000,000,000

5 Iraq 115,000,000,000

6 Kuwait 104,000,000,000

7 United Arab Emirates 97,800,000,000

8 Russia 60,000,000,000

9 Libya 46,420,000,000

10 Nigeria 37,200,000,000

11 Kazakhstan 30,000,000,000

12 Qatar 25,380,000,000

13 United States 20,680,000,000

14 China 14,800,000,000

15 Brazil 12,860,000,000

16 Algeria 12,200,000,000

17 Mexico 10,420,000,000

18 Angola 9,500,000,000

19 Azerbaijan 7,000,000,000

20 Ecuador 6,510,000,000

Data obtained from www.cia.gov

Throughout its history, humanity burned 900 billion barrels. At the current rate of consumption, proven oil enough for the next 40 years, undiscovered - for another 10-50 years (depending on which estimates take note), as mentioned above. There are also large reserves of oil (3,400 billion barrels) of oil sands in Canada and Venezuela. This oil at the current rate of consumption will last for 110 years, but the technology is not yet perfected - cannot produce large enough quantities. Take into account the growth of consumption is meaningless because it is itself hardly predictable. If optimize oil production, it is possible to reach for even longer. Now we discovered the depths of only about 30% of all the oil contained in the oil reservoirs.

Europe has never been an oil rich continent, but still European countries produce oil , which indeed is not enough for them. The table below from eurostat.eu shows oil production level in European countries.

It is clearly shown that the only countries in European Union who is capable of producing relatively large of amount of oil are Norway and United Kingdom. But the rate of production of oil falls down in these countries , which indicates that this countries are running of oil , and they have already reached their peak of oil mentioned by Hubbert. UK declined its production almost by 7000 barrels in one year and almost twice in 11 years, which proves the theory of Hubbert.

In rest of the world the situation is quite better comparing to Europe, major Arabian oil producing countries are not running of oil yet. This is clearly illustrated by diagram provided by Opec.

That is true that arabian countries has also reached their peak of oil, but analysing the rate of production and oil reserves , it is stated that oil shortage is still away from these countries.

According to last year statistics almost 35 billion of barrels is considered as huge amount of oil , which can cover all europes consumption need.

In conclusion, all these three factors such as oil reserves, consumption, and production helps to identify or better said to estimate the amount oil which can satisfy us for consecutive years.

How much on the planet the main resource remains, through which it was possible to make possible the modern civilization. Attempts to find an answer to this question has recently been more frequent, but still there is no exact answer. It may be stated that there are reserves of oil which indeed enough for this century, and adding undiscovered places ( 110-150 ) which is one more century. Oil will be run out of its quantity mostly after discovering new alternatives of oil energy such as bio gas , bio-ethanol and so on.

growth oil alternative

Sources

E-library of State Oil Academy , translated by student.

The Oil and the Glory: The Pursuit of Empire and Fortune on the Caspian Sea by Steve Levine

Oil Revenues Usage by Hikmet Gadirov

http://www.bp.com/multipleimagesection.do?categoryId=6840&contentId=7021557

http://www.opec.org/opec_web/en/publications/338.htm

http://epp.eurostat.ec.europa.eu/portal/page/portal/energy/data/main_tables

www.socar.az

www.nationmaster.com/time.php?stat=ene_oil_pro-energy-oil-production&country

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