The Locker Room

We're running out of oil (or not)

Posted by Mitch Kokai at 1:35 PM

Thomas Sowell once wrote:

Economics is a great field for nostalgia buffs because the same old fallacies keep coming back, like golden oldies in music.

Take this example from the latest TIME:

An annual British Petroleum report claims that the world has enough oil reserves to last 40 more years. The study, based on officially submitted figures, shows 15 percent more proven oil reserves globally than a decade ago. In fact, only North America has less known oil now than it had 20 years ago. Governments often rely on the BP reports, but many scientists question whether the world really has that long to go before its fuel gauge hits empty.

The TIME writer wins bonus points for pointing out that proven oil reserves grew during the past decade, then blows all the bonus points with the caveat about "many scientists" and their fears of impending doom.

Sowell covers this topic in the latest edition of his Basic Economics (Basic Books, 2007). Since I didn't have the book handy, I found a 2005 column in which he sets the record straight on our dwindling oil supply.

Back in 1960, a best-selling book titled "The Waste Makers" by Vance Packard showed that the known reserves of petroleum in the United States were only enough to last another 13 years at the current rate of usage. Yet, 13 years later, the United States had larger known reserves of petroleum than in 1960.

This has been a worldwide phenomenon. At the end of the 20th century, the known reserves of petroleum in the world were more than ten times what they were in the middle of the 20th century -- despite an ever-growing use of oil.

Why are we unlikely to have an empty fuel gauge?

No matter how many centuries' supply of oil there is on the planet, the high cost of oil exploration ensures that only the most minute fraction of that oil will be known at any given time. Thus there have long been recurring false predictions that we were running out of petroleum, as well as other natural resources.

Remember that history the next time you hear about our dwindling supply of natural resources.

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