Note: For the best understanding of the post below, please download the following excel workbook, my Petroleum Demand Analysis.

Petroleum is a commodity that forms one of the cornerstones that make up the foundation of the technological world. Without it, products such as plastics, gasoline, Diesel fuel, kerosene, lubricants, and asphalt would not exist. Unfortunately for us, the supply of petroleum is finite. The more we use it today, the less we have for tomorrow. So the question becomes, “When will the petroleum run out?”The World’s average daily petroleum demand for the first three quarters of 2007 was 85.31 million barrels per day. This sounds like a lot, but without the context of the total available supply this is a meaningless figure.

The Energy Information Administration has graciously posted three estimates for the total available supply of petroleum, which is referred to as the Ultimate Recovery Estimate. The Highest Ultimate Recovery Estimate is 3,896 billion barrels, the Mean Ultimate Recovery Estimate is 3,003 billion barrels, and the Lowest Ultimate Recovery Estimate is 2,248 billion barrels. These estimates are total World supply for all time, meaning that in order to produce a forecast for when the supply will run out, one must subtract the aggregate amount of petroleum already recovered. For the purposes of this analysis 1,000 billion barrels was utilized as the amount already recovered. Note the total recovery was approximately 900 billion barrels in the year 2000, so the 1,000 billion barrels figure came about by adding the cumulative recoveries from 2001-2007 to the 900 billion. This resulted in an approximate answer of 1,000 billion barrels of cumulative recovery (this is conservative, as the cumulative recovery is actually slightly higher than 1,000 billion barrels).

So, “When will the petroleum run out?” The petroleum supply will be fully depleted anywhere from 2028 to 2070, with the highest probability range being between 2036 and 2050. Attached is a Petroleum demand analysis I created that contains all of the detailed assumptions and calculations supporting the conclusions found herein.

Energy Information Administration Analysis

The Energy Independence and Security Act (HR 6), signed into law on December 19, 2007, raised the minimum average fuel efficiency standards for cars, light trucks and SUVs from the current 27.5 miles per gallon (for cars) and 22.5 miles per gallon (for light trucks/SUVs) to 35 miles per gallon by the year 2020. There are a variety of other provisions ranging from efficiency standards on light bulbs to minimum volumes of renewable fuels used as percentage of total fuel. This bill’s goal was to reduce U.S. dependence on foreign petroleum supplies and create an environment that is friendly to renewable energy and fuel technologies. But does it do enough to avert disaster? No.

Carbon Biofuels

Carbon Biofuels courtesy of the National Science Foundation, by Nicolle Rager Fuller

Currently, the U.S. represents 24% of total World petroleum demand. The policy changes enacted by the U.S. government therefore only impacts the growth rate of one quarter of the World’s petroleum demand. The remaining 76% of total World petroleum demand is unaffected by The Energy Independence and Security Act. As time goes by, the U.S. represents incrementally smaller percentages of the total World demand. This is because the U.S. demand growth has remained fairly stable at approximately 1% for several decades. China, on the other hand, has seen over 10% growth in their petroleum demand in the last five years. As China industrializes, the sheer magnitude of the country’s population lends itself to massive petroleum demand. China’s petroleum demand will eclipse the U.S.’ as early as 2015. China’s current demand is one third of U.S.’ demand.

Even if China were not such a huge factor in the global petroleum demand picture, U.S. measures to increase fuel efficiency by a paltry 7.5 miles per gallon does not help overall demand decrease at a high enough rate to materially impact the rate at which the Ultimate Recovery Estimate is being drained. What is to be done? There is no doubt about it, the petroleum is running out, and sooner than you might have previously thought. Given the lengthy lead time from development to wide-scale implementation of new technologies, we need to be concerned that the “solutions” scientists come up with for alternative fuels and energy may be too little, too late. Even if developers were able to invent an alternative fuel technology tomorrow, there would be at least five to ten years of research needed to make the technology feasible for wide scale implementation. Then, there is at least another decade involved with actually implementing this new technology. Conservatively, one could say that there is at least a 20 year window from invention to implementation of an alternative fuel or energy source to take the place of petroleum. It is currently 2008, with no development that fits the bill even on the horizon, and the petroleum could run out in as little as 20 years. Granted, the more likely scenario is running out of supply between 2036 and 2050, but that still only leaves less than 50 years to invent a totally new technology and implement it, all the while weaning ourselves from petroleum products. I personally think we are cutting it a little close.

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