Dallas Breeze

So my second post.  I thought I would put up my thoughts on a noncontroversial topic like  oil.

Well when gas prices started to near $4 a gallon in the U.S. a while back I was curious about the cause and decided to look into it.

I soon found out this is no easy topic.  Questions begat more questions.

How many gallons are in a barrel?  42

How many gallons of gas from a barrel?   ~19.5

What is oil? The decayed remains of ancient life

How does oil make gasoline, jet fuel, plastic, make up, medicine, vitamins, everything? It’s refined/separated

Medicine, Vitamins? These are made from petrochemical feedstocks.  Hydrocarbons.

How much oil do we use?  84.9 million barrel a day!

Those are the easy questions.

How much oil is left?  This is tricky.

Let’s break it down into more questions.

How much oil have we used?  1 trillion barrels

Ok how much altogether?  That’s where this whole thing breaks down.  There are several considerations.

First what is a P number?  This is the number geologist use to estimate how much is in a field before a well is ever drilled.  Three P numbers are generally used.  P5 has a 5% probability, p50 has 50% and p95 has 95%.  So a hypothetical field may have a p5 of 10 billion barrels, a p50 of   5 billions barrels, and a p95 of 2 billion barrels.

This means the given example has a great chance of producing 2 billions barrels and a slim chance at 10 billion barrels.  Here lies the root of the difficulty in estimating how much oil is left.  The only groups interested in compiling such data have an agenda.

On one side there are people that want to show we are running out of oil.  They always choose the p95 number and thus present a number that is at least what we have left.  On the other side are people that want to show an abundance of oil.  They choose the p5 number and present a number that is a slim chance at best.

From what I’ve read the number seems to be somewhere between 1 and 2 trillion left.

It gets more complicated though when you add in undiscovered reserves.  Here it is an educated guess at best.  Some argue that the biggest fields have already been found.  I liken this to the discovery of new continents.  Today we can safely say that there may  be undiscovered islands, but there are no undiscovered continents.

So are we medieval sailors with continents left to be discovered?  I leave that up to you, but I think we have already discovered the largest fields.

Ok so we think the amount of remaining oil is between 1 and 2 trillion barrels.  If we’ve used 1 trillion then the total ever available is between 2 and 3 trillion.

Now our original question.  Why does gas cost what it does?  That gets even more complicated.  We’ve got a grasp now on the supply and we know the demand is 84.9 barrels a day.  Where is demand headed?  Where is supply headed?  Unfortunately it will have to wait for another post and a look at Hubbert’s curve.