When will oil run out? This question has been recurring for more than a century now. Furthermore, this question was the topic of intense dispute from the 1970s through 2010.
It’s still disputed exactly how much oil could ultimately be extracted from the ground, but estimates have come much closer together now. These days, estaimtes of “all liquids” including unconventional oil range from 5 trillion barrels (on the conservative side) to 10 trillion barrels (on the generous side). Thus far, the world has used approximately 1.4 trillion barrels, and uses 37 billion barrels per year.
This issue is much less controversial than it was in the past. Not only have estimates come closer together, but perhps more importantly, there is now a conversion to electric vehicles underway, which changes the picture dramatically. We now have an obvious and widespread alternative for transportation when oil production starts declining. This makes the issue seem far less pressing. Probably, the debate over oil availability will never again reach the intensity it had from 1975-2010.
EV penetration is important because it ameliorates the effects of fossil fuel decline. If the global economy switches to EVs at exactly the same rate that oil production declines, starting right when oil peaks, then the decline of oil would have no effect on vehicle miles travelled. If EV adoption becomes widespread before oil production starts declining for geological reasons, then it pushes out the date of exhaustion and lengthens the gradual decline.
Any scenarios of future oil usage must therefore take into account anticipated EV penetration. Any scenario which omitted this would be in serious error. At present, EV market share for passenger vehicles is around 24%. Even if further electrification is very gradual, it still totally changes the long-term trajectory of oil demand and production. As a result, we must include estimates of EV penetration in our scenarios for future oil production.
In this article, I will lay out several scenarios for future oil production. Each scenario will start with different assumptions of how much oil is the ground, and how quickly oil demand decliens because of EV penetration.
Scenario 1: Generous Assumptions
Here we will assume that the total amount of oil in the ground that could ever be extracted was 10 trillion barrels. Oil production starts declining 5 years from now because of EV penentration and declines linearly to zero (for both passenger vehicles and heavy trucks) over 40 years. In which case, we obtain the following figures:
1,400 billion Oil used so far
185 billion Oil used in the next 5 years
740 billion Oil used during the decline phase for the next 40 years
2,325 billion Oil extracted ever
10,000 billion Total Oil available
Thus, using optimistic assumptions, the global economy never uses more than 25% of the oil that was available to it.
These figures are optimistic but plausible. As a result, it’s not clear that the world ever faces an insolubile liquid fuels crisis.
Scenario 2: Moderate Assumptions
In this scenario, we assume that world had 7 trilliion barrels initially, oil starts declining 10 years from now because of EV penetration, and it declines linearly toward zero over 80 years. In which case, we obtain the following figures:
1,400 billion Oil used so far
370 billion Oil used in the next 10 years
1,480 billion Oil used during the decline phase for the next 80 years
3,250 billion Oil extracted ever
7,000 billion Total oil available
Thus, using moderate assumptions, the global economy never uses half of the oil that was available to it.
This is a moderate case. The figure of 7,000 URR is a median estimate between optimistic and pessimistic ones. The conversion to EVs over 80 years is slower than appears to be happening; for example, EV market share has grown from 1% of passenger vehicles to 24% in less than a decade.
Thus, using moderate or even slightly pessimistic assumptions, the world still never runs out of oil or even comes close.
Scenario 3: Pessimistic assumptions
In this scenario, we will accept Jean Laherrere’s most recent estimate of 5 trillion barrels of liquids ever extracted. Bear in mind that this estimate relies on Hubbert Linearization, which has seriously underestimated oil resources in the past. Still, this is the most conservative plausible estimate, so we’ll use it here.
We’ll assume a 10-year delay before oil demand starts declining because of EV penetration. Furthermore, we will assume that the transition to EVs causes oil demand to decline 1% linearly per year, in other words, a full transition would take an entire century. Furthermore, we will assume that 20% of oil usage is not transitioned at all. This is because some sectors are difficult to electrify. For exanple, some long-haul trucking is difficult to electrify because it involves long journeys in very rural regions where electric recharging infrastructure would be expensive and rarely used, for example, in Outback Australia, rural Nevada, etc, so those places continue to use diesel in trucking in this scenario. Also, ocean shipping still relies on heavy oil in this scenario. Also, aviation is impossible to electrify, so it still relies on oil in this scenario. However, liquid fossil fuels are considered interchangeable, so ocean ships could be built using turbine engines that run off of diesel, heavy fuel oil, gasoline, etc. Thus, oil demand does not decline to zero, but declines to 20% of its present value and stays there. In which case, we obtain the following figures:
1,400 billion Oil used so far
370 billion Oil used in the next 10 years
1,480 billion Oil used during the decline phase of 80% for the next 80 years
3,250 billion Oil extracted up until a permanent 20% plateau
5,000 billion Total oil available
Thus, oil runs out in 326 years. When the world has electrified everything it can easily electrify, over 80 years, it is left with a 20% oil usage which is difficult to electrify and 1,750 billion barrels of oil remaining (5,000 - 3,250, from above). At 20% usage per year (7.4 billion barrels), this leaves 236 years, plus the 80+10 years which had elapsed so far, yielding 326 years total.
Conclusions
In all scenarios, the world does not face a liquid fuels crisis. Even using very pessimistic assumptions, there is no shortage of liquid fuels for centuries. Provided the world continues transitioning to EVs, at least very gradually (1% per year linear demand reduction), there will be no liquid fuels crisis.
Furthermore, there doesn’t appear to be any plausible calculation which results in a liquid fuels crisis earlier than 2100. No reasonable assumptions result in that outcome. Even using Jean Lahererre’s very pessimistic Hubbert calculations for future oil production, the world peaks in 2040 and still produces half the current amount of liquids in the year 2100. However, that rate of geological depletion is easily outrun by even a very gradual transition to EVs.
It must also be mentioned that the conversion to EVs which has occured so far was not the fastest possible. The market share for EVs in passenger vehicles increased from 1% to 24% in 10 years, but that was done lazily. That was done under no threat and without extremely high oil prices. Presumably, an actual shortage of oil could lead to a much faster transition than that, after some delay while new factories are built, resulting in no reduction in vehicle miles travelled even with absurdly pessimistic assumptions about future oil production.
As a result, the world simply does not face an imminent, insoluble liquid fuels crisis.
Of course, there could be other reasons (besides depletion) for a liquid fuels crisis, such as a large war in the middle east, but there will be no insoluble liqiud fuels crisis during this century because of oil depltion.
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