Originally Posted by
ChipSeal
Your description of his position must be confused, because this assertion makes no sense. It is conflating two different concepts, rate of extraction, (Flow) and reserves. (The amount of recoverable oil in the ground.)
There remains loads of oil reserves. Production right now is stagnate or declining. Consumption is now equal or greater than production and will inevitably overwhelm production in the next few years- this is why oil is so expensive! Our immediate problem is not how much oil there is, but how fast we can extract it.
In the month of June 2005, world oil production averaged 88 million barrels of oil a day. In no month since then has world oil production averaged such a high rate of flow. In other words, new oil wells have not been able to overcome the natural decline of old wells. (It can take as much as five years to find and bring into production new wells, so the current high price of oil will likely result in new production records.) But now even the CEOs of many big oil companies scoff at the idea of 130 million barrels a day production as being possible. Saudi Arabia has promised for over three years that they will raise their production, but they have not done so. It is widely believed that it is because they cannot raise production, rather than they will not.
It is hard to believe that there are producers out there that are holding back production with oil at these prices.
Meanwhile, the largest single consumer of oil, the USA, is increasing consumption rate at slightly more than 1% each year. Both of the most populated countries in the world (India, China) are increasing their consumption of oil at about 7% a year. The current high price has not yet been high enough to slow the increase in demand. This is the nut of the current bind we are in. The flow of oil can meet current demand, but just barely. Oil flow has not increased from the rate it was in June 2005. Demand for oil seems insatiable. As China and India develop a huge middle class, they are buying cars and refrigerators and computers. So while oil flow may make new production records in the coming years, demand will inevitably continue to rise until actual shortages curtail that growth.
So Greenspan is right that we have lots of oil. He is right that the world in on track to consume 130 million barrels a day. He is wrong to think we can meet that high of daily production.
We have a painful and bumpy road ahead as we turn to other ways of fueling our economy. It will be less painful if government would refrain from picking favorites and squandering time and resources as has been demonstrated by the folly of corn ethanol. Alas, I digress.
For hundreds of years into the future, man will be using oil. It will be used more selectively though. Less for transportation (outside of aviation), less for heating, but more for chemicals. (Plastics etc.) I am optimistic that we have a prosperous future, even though we can't yet see what it will be like.
Good post; I think your assessment of the situation is spot-on. Even kids can get it. I teach 6th grade science. As a graphing exercise, I had my students plot projected world petroleum demand and production between 2005-2030, using US government figures I found on the internet; the two lines meet in 2012; after that point there is an ever-widening gap. (I was really surprised by how nearly flat the production line is.)
And as for the US economy not being signifantly impacted by $100 barrels of oil: a simple trip to the grocery store and a quick look at the business pages of any newspaper should convince anyone that severe economic impacts are already here, especially for the US.