US Oil Reserves: Four Scenarios
by Chris Geerlings, New World Century. July 24, 2007
Having evaluated current data on reserves, consumption and production of oil in the United States, I have compiled four charts which illustrate various scenarios of what might occur over the next ten to twenty years. The data sources for this brief study are the United States Department of Energy and the CIA World Factbook. *All chart numbers reflect billions of barrels.
Scenario One. It is 2007 and current United States oil reserves are 23.45 billion barrels. Annual consumption in the US is 7.56 billion barrels, while annual production is 2.77 billion barrels. This results in an oil deficit of 4.79 billion barrels per year, or 63% of consumption. Scenario one assumes that nothing changes. No discoveries are made that add to reserves, and annual consumption and production levels neither increase nor decrease. Annual production is simply subtracted from reserves. Under this scenario, domestic reserves would be depleted in the year 2016.
Scenario Two. The numbers for 2007 remain the same, but going forward, this scenario more accurately reflects reality. Production levels here decrease by 5% per year since production tends to taper off as depletion approaches. Also, consumption increases by 3% per year reflecting both population growth and economic growth. As expected, the decrease in the rate of production slows the rate of depletion of reserves, but it also increases imports over time. Under this scenario, oil imports would increase from 63% to 84% in the next ten years, reaching 100% when reserves became depleted in the year 2018, two years later than in scenario one.
Scenario Three. Here, consumption and production data remain constant as in the first scenario. However, in order to reflect oil discoveries, an increase of 5% per year is added to reserves prior to the production amount being subtracted. This would extend United States oil reserves until 2019, or three years longer than under the first scenario.
Scenario Four. This final scenario combines the second and the third scenarios. As in scenario two, consumption increases by 3% per year while production declines by 5% per year. And as in scenario three, a 5% discovery allowance is added to reserves each year. Because discoveries as well as changes in consumption and production have been factored into this scenario, it is likely the most realistic of the four. Here, United States oil reserves would last an additional decade longer than under the first scenario, until 2026.
It is interesting to note that, even under the final scenario, which is the most optimistic and accurate of the four:
- Despite discoveries adding 5% per year, United States oil reserves would be half of today's level in only eight years.
- United States domestic oil reserves would be completely depleted in less than 20 years.
- US oil imports would need to increase from the current 63% of consumption to 84% within a decade, and to 90% within fifteen years.
- US oil imports would need to increase from less than 5 billion barrels per year today, to over 13 billion barrels per year once domestic reserves ran out.
Today, no significant domestic oil discoveries are being made. If the US decided to shut in some of its domestic production to extend the life of reserves, oil imports, and the trade deficit, would need to increase significantly. (This of course also assumes that oil exporters will continue to accept dollars for oil indefinitely, which itself is an uncertainty.) On the other hand, if the US seeks to increase domestic production in order to reduce imports, reserves will be depleted even faster! Importing nearly two-thirds of our energy with an eroding manufacturing base, as we do today, is tenuous enough. Imagine trying to import 90%! The endgame is here. And contrary to what some would believe, corn will not save us.
© 2007 Chris Geerlings
Chris Geerlings, New World Century. Email