So Where’s The Oil?

I’m pulling together some data to try to estimate the impact of opening ANWR and additional offshore areas on the price of crude oil and, by extension, gasoline.  Opening those areas up would presumably increase the proven reserves of the US, thus increasing the world supply and, according to the McCain campaign and several Republican congress members, lower the price of gasoline.

To come up with any sort of credible answer to whether or not opening ANWR and additional offshore areas would lower gasoline, first we need to know who has how much oil.  Then we can quantitatively assess the impacts of increasing US supplies by some reasonable estimate of how much additional proven reserves ANWR and offshore might add.

So who has the oil?  I pulled together data from several sources.  I used the BP Statistical Review of World Energy, US Dept. of Energy data, OPEC Secretariat, UN International Energy Authority, Reuters, and various other sources.  Here’s the final graph:

World Proven Oil Reserves, 2007

World Proven Oil Reserves, 2007

The US (on the far left of the graph) had roughly 29.4 billion barrels of proven oil reserves at the end of 2007.  For a sizable chunk of the 20th century we were the 3rd largest producer of oil in the world, but US production peaked in the 1970s and our reserves are now in the depletion phase.  Our reserves to production ratio (R/P) is now 11.9, which means that for every barrel we pumped out of the ground in 2007 there were just under 12 barrels left for future pumping.  In simple (real simple, too simple, actually) terms, that means that if we stopped all oil exploration we would be able to pump oil at today’s rate for just under 12 years before we ran out of oil.  That’s including importing 2/3 of the oil we consume.  For comparison, here’s the R/P ratios of other selected countries:

  • 22.9 – Canada, including oil sands
  • 9.6 – Mexico, predominantly due to the fact that the Canterell field is declining
  • 91.3 – Venezuela
  • 22.1 – Azerbaijan
  • 73.2 – Kazakhstan
  • 86.2 – Iran
  • >100 – Iraq
  • >100 – Kuwait
  • 62.8 – Qatar
  • 69.5 – Saudi Arabia
  • 91.9 – United Arab Emirates
  • 61.5 – Libya
  • 42.1 – Nigeria

So while Saudi Arabia is the world’s largest producer by a long shot, producing 8.48 million barrels/day (totaling over 3 billion barrels of oil in 2007), it is producing at a rate which it cannot sustain indefinitely given its known reserves.  Iraq, Kuwait, and the UAE are producing at a much more reasonable rate by comparison.

So the final output is that the US has roughly 29.4 billion barrels of proven crude oil reserves, which is a whopping 2.4% of the world’s proven oil reserves (world proven oil reserves are around 1.39 trillion barrels).  Given that 1002 area of ANWR has somewhere around 7 billion barrels (+/- 3 billion), opening ANWR could conceivably increase US proven oil reserves by about 19%.  Not too shabby.  But remember, oil has high liquidity, so a more proper comparison would be to world oil reserves.  The impact on world oil reserves would be more on the order of 0.5%, probably not enough to make much of a difference in the price of gasoline.

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