Commentary By Ron Beasley
Kurt Cobb reminds us that world oil production has been flat for six years. And yes he has graphs and numbers to back it up. Even with the sorry shape of the world economy the price of oil remains stuck in the mid $90 bbl range. Any economic expansion will drive it even higher. For those who think this could all be fixed with more domestic drilling Cobb has some data for you too.
The media loves to announce new seemingly large discoveries of oil as if they are the solution to what is really an unfolding liquid fuels crisis. They point to the Tupi field off Brazil which is purported to have 8 billion barrels of oil in it. And, they point to discoveries in the deepwater Gulf of Mexico thought to contain between 3 and 15 billion barrels. And, they point to the 4 billion barrels in the Bakken Shale in North Dakota. It all sounds like a lot. When I ask audiences how long a billion barrels of oil will last the world at current rates of consumption, I often get replies that range anywhere from three months to 5 years. The correct answer is 12 days. Just multiply these multi-billion-barrel discoveries by 12, and you'll realize right away that they are not going to overcome the constraints we are experiencing in oil supplies.
I'll do the arithmetic for you - assuming the numbers are correct that's 27 billion barrels. You mutiply that by 12 and you see it represents 324 days of world oil consumption. Since the numbers are probably all high it's probably more like a six month supply.