Permanent oil shock
The two basic factors of the world's oil supply are (1) geologic (discoveries) and (2) economic (distribution). Petroleum geologist have done such a good job of finding oil that it looks as easy as growing crops, and their engineers deliver the petroleum like clockwork. Consequently, the public and many planners consider global distribution to be the only supply problem and attribute all price swings to simple economics. They erroneously ignore critical long-term geological facts and assume that cash spent = oil found. This premise is invalid where no oil exists or where prospects are poor. Most people are unaware that the global quality of geological/oil prospects has declined so much that the amount of new oil found per wildcat well has dropped 50% since a 1969 peak. Discoveries of the most critical but easiest to find giant fields (each with over 500 million bbl of recoverable oil) are now stalled at 315 known worldwide. They are simply no longer finding enough new crude oil to replace the world's huge consumption of 20 billion bbl (840 billion gal) per year. OPEC oil price shocks no. 1 (1973) and no. 2 (1979) were relatively easy to handle. During the 1960s, several new giant non-OPEC oil fields and provinces were discovered worldwide offshore and in Arctic Alaska by the exploratory breakthrough of electronic digital seismic surveys, and engineers perfected the requisite marine production technology. By lucky coincidence, these virgin giant fields came on stream at just the right time during the 1970s, and the OPEC nations were temporarily brought to heel. But the 1986 oil glut reconfirmed that Saudi Arabia can make - or break - the price of any fuel in the world - at will. Non-OPEC oil production is now topping out and will be declining virtually everywhere within 10 years.
- Research Organization:
- Novum Corp., Santa Barbara, CA
- OSTI ID:
- 5991445
- Report Number(s):
- CONF-870606-
- Journal Information:
- AAPG (Am. Assoc. Pet. Geol.) Bull.; (United States), Vol. 71:5; Conference: American Association of Petroleum Geologists annual meeting, Los Angeles, CA, USA, 7 Jun 1987
- Country of Publication:
- United States
- Language:
- English
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