ARTICLE IN PRESS
Energy Policy 34 (2006) 508–514
www.elsevier.com/locate/enpol
Oil scarcity: What have the past three decades revealed?
G.C. Watkins
University of Aberdeen and Cerecon Limited, Canada
Abstract
Oil shortages have been predicted over the past 30 years. In fact, oil is more plentiful now in an economic sense than in 1973. The
reason for such misconceptions lies mainly in reliance on analytical techniques that do not comprehend oil as an economic commodity.
r 2005 Published by Elsevier Ltd.
Keywords: Oil prices; Reserves; Hubbert curve
1. Introduction
In 1973, proven oil reserves remaining in the world were
635 billion barrels, production was 59 million barrels per
day (mmb/d), of which 31 mmb/d or 53% was supplied by
OPEC countries; the ratio of oil reserves to annual
production (R/P ratio) was 31 years. Thirty years later
(2003), remaining reserves had increased by some 80%,
production had risen by about 30%, OPEC output was at
much the same level as in 1973, its share of the world total
had dropped to around 40%, and the world R/P ratio was
some 40 years. Reserve additions over the 30-year interval
more than replaced total production, a total which in turn
exceeded the 1973 reserve base.
Yet, the dominant opinion in the mid-1970s and beyond
was one of looming oil shortages that would lead to very
heavy reliance on OPEC. US President Jimmy Carter
proclaimed in 1977 that ‘‘We could use up all the proven
reserves in the entire world by the end of the next
decadey’’.1 Admittedly, this was an egregious example,
but there have been many other studies intent on spreading
Severe Anaemic Reserves Syndrome (SARS)—a species of
belief that has proved remarkably resistant to evidence.2
1
As quoted in Francisco Parra (2004, p. 254).
See various studies cited in Parra (2004, pp. 218–219); in 1979,
Resources for the Future (RFF) said ‘‘While the petroleum and natural
gas era is not over, the contribution of these fossil fuels to world energy
requirements will probably pass its peak within the lifetime of most
persons now living’’ (Resources for the Future (1979, p. 426). For a recent
apocalyptic opinion (2002), see Deffeyes ‘‘ysomewhere between two and
2
0301-4215/$ - see front matter r 2005 Published by Elsevier Ltd.
doi:10.1016/j.enpol.2005.11.006
My paper starts by remarking on oil as an economic
commodity, before examining two types of evidence on oil
scarcity. The first is an elaboration of the background data
on the world oil supply cited above. The second is
information on reserve prices—what willing purchasers
and sellers paid for reserves in the ground—over the past
20 years or so. I then look at the analytical foundation
underlying much of the SARS view of the oil world. Next, I
suggest a more suitable analytical framework, and mention
the results of one attempt to estimate oil supply functions.
Concluding remarks follow.
2. Oil: an economic commodity
Oil entered the economic system because it was cheaper
than alternatives or served new forms of energy demand.
Oil will leave the economic system when it becomes more
expensive than alternative sources or when the end uses it
satisfies disappear.
The oil industry is not a freak. Like other mineral
extractive activities, supply is added by new investment,
offsetting depletion. But the results of that investment
(reserve additions) are uncertain, varying from abundant to
meagre—unlike, say, adding capacity by building a
manufacturing plant. One never knows what will be found,
if anything. When exploration is successful and a field is
discovered, its recoverable reserves will not be disclosed
(footnote continued)
six years from now, worldwide production will peak. After that chronic
shortages will be a way of life’’ quoted in Ryan (2003, p. 9).
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509
Table 1
Salient oil reserves and production data
1973
1983
1993
2003
World reserves (billion barrels)
Total OPEC
ME OPEC
Other OPEC
Non-OPEC
635
401 (63%)
317 (51%)
84 (13%)
234 (37%)
723
475 (66%)
392 (59%)
83 (12%)
248 (34%)
1024
775 (76%)
650 (64%)
123 (12%)
249 (24%)
1148
882 (77%)
718 (63%)
164 (14%)
266 (23%)
World output (mmb/d)
Total OPEC
ME OPEC
Other OPEC
Non-OPEC
59
31
21
10
28
57
18 (32%)
11 (20%)
7 (12%)
39 (68%)
66
27 (41%)
18 (27%)
9 (14%)
39 (59%)
77
30 (39%)
21 (27%)
9 (12%)
47 (61%)
World R/P ratio (years)
Total OPEC
ME OPEC
Other OPEC
Non-OPEC
30
35
42
23
23
35
72
98
32
18
42
78
99
37
18
41
80
93
50
16
World price (nominal $US/b)
($US2003/b)
$3.29
$13.68
$28.77
$53.30
$16.97
$21.74
$28.83
$28.83
(53%)
(36%)
(17%)
(47%)
Sources: BP Statistical Review, www.bp.com/statisticalreview2004.
Note: 1973, 1983 prices are Arabian Light posted at Ras Tanura; 1993, 2003 prices are Brent dated.
until abandonment, when reserves will have equalled
production. Another peculiarity of the oil industry is that
its inventory level—represented by its reserves—instead of
lasting for a few weeks or months must be large enough to
last for several years.
Other things equal, investment per unit of reserves would
be expected to increase as exploration proceeds from more
attractive to poorer prospects, although any strict sequential upward ratcheting over time seldom holds (low cost
deposits are not necessarily found first). Correspondingly,
prices would progressively increase over time until demand
would be choked off. Yet, unit costs—albeit more difficult
to track down of late with inferior information—generally
have been in denial of any such secular trend. Other things
have not been equal: the data reviewed below suggest that
overall new knowledge has offset expected declining yields
as exploration in areas under cultivation became more
intense, and new horizons have continued to emerge. This
picture is consistent with a stand-off for what Adelman has
called the ‘‘endless tug-of-war between diminishing returns
and increasing knowledge’’ (Adelman (1990, p. 3)).
3. Evidence from salient supply data
Table 1 shows key data on oil supply for 10-year
intervals, starting in 1973. It might have been equally
entitled ‘Confounding Cassandra’. Proven reserves of
crude oil remaining in the world rose by some 500 billion
barrels, 2003 over 1973, notwithstanding total production
of about 730 billion barrels over this period: some
shortage.3 Reserve additions have more than offset
depletion.
Reserves in the Middle East remain predominant.
Reserves in non-OPEC countries, even though the rate at
which they were being produced greatly exceeded that in
the Middle East, nevertheless increased by some 30 billion
barrels by 2003, compared to 1973. The noticeable jump in
world reserves between 1983 and 1993 was less a result of
new investment adding supply, and more a reassessment of
reserves by OPEC countries, especially those in the Middle
East, not the least encouraged by competition among them
for OPEC quotas.
In 1973, OPEC production accounted for 53% of the
world total, but expectations that its share would expand
further have been squashed: in 2003, OPEC production
was slightly smaller absolutely than in 1973 and its market
share has been dramatically cut to around 40%. Production by Middle East OPEC members was the same in 2003
as in 1973. In 2003, the majority of the oil market was
3
Reserves are proved reserves, ‘‘ythose quantities that geological and
engineering information indicates with reasonable certainty can be
recovered in the future from reservoirs under existing economic and
operating conditions’’ (BP Statistical Review, 2004, p. 4). ‘Oil’ here
includes crude oil, oil sands and natural gas liquids (NGLs). However,
Canadian oil sands reserves are confined to those serving projects under
active development; these reserves thus exclude the great bulk of the 175
billion barrels of remaining bitumen reserves which Alberta regards as
established. The quality of much of the reserve data outside of North
America (excluding Mexico) and the North Sea is not good and has tended
to deteriorate further after the mid-1980s. Note, there may be some
inconsistency between reserve definitions in 1973 and those for other
years.
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G.C. Watkins / Energy Policy 34 (2006) 508–514
supplied by non-OPEC countries, at about 60% of world
production, in contrast to 47% in 1973.
Proven reserves are equivalent to warehouse inventory.
A prudent profit sensitive producer operating in a
competitive market would operate with an R/P ratio of
10–15 years.4 The non-OPEC countries’ aggregate R/P
ratio now approaches this level, declining from 23 years in
1973. In short, non-OPEC is producing at a mature R/P
ratio, one where production is not subject to restraint from
either policy measures or insufficient installed capacity. By
way of contrast, OPEC’s R/P ratio of currently about 80
years illustrates the degree of excess commercial reserves
held by these countries; and while the accuracy of OPEC’s
reserve estimates is questionable, it would take a very
major error to alter this picture of a substantial reserve
surplus.
If OPEC’s installed capacity matched a lower R/P ratio,
oil would flood the market, prices would plummet and the
more expensive non-OPEC production would be stranded.
Hence OPEC’s policy of production restraint to keep prices
in a target range well above marginal costs of Middle East
sources does not displease governments of those nonOPEC countries, e.g., the United States, with sizeable,
high-cost domestic production.
Prices in 2003 were close to nine times higher than those
in 1973 in money-of-day terms, in real terms they were
about double; in 1983, the corresponding numbers in
relation to 1973 were over seven times and over three times.
Note that 1973 prices in turn approached double those
prevailing in the Middle East in 1970. Extending the
perspective to 1970 would make the price increases more
pronounced.5
In large measure, the strong performance of non-OPEC
production over the past 30 years was a classic response to
opportunities created by the umbrella of higher prices
sustained by OPEC, although the umbrella leaked when
OPEC quota discipline was especially lax or when the
burden of output adjustment devolved mainly on one
OPEC country (Saudi Arabia).
To recapitulate, the physical quantity of proven reserves
is a measure of scarcity, though not a particularly good
one, since proven reserves are in the nature of working
inventory and do not represent eventual supply. Yet, the
world inventory of reserves has markedly increased over
three decades even though production has risen strongly.
This runs counter to the opinion anticipating emerging
shortages.
4
An analogy with reserve deliverability requirements for natural gas is
useful here. In the 1980s, typical long-term contracts in North America
called for a rate of 1 mmcf/d/7.3 bcf of reserves, implying an R/P ratio of
20 years. With the elimination of spare capacity in the 1990s, current
contracts—of which few are long term—call more for corporate
warranties than specific deliverability standards, and the implicit R/P
ratio is about 10 years, matching the aggregate North American natural
gas industry ratio.
5
The posted price of Arabian light ex Ras Tanura in 1970 was $1.80/b
(BP Statistical Review, 2004, p. 4).
4. Evidence from reserve prices
Price and costs trends are economic indicators of
scarcity. Ostensibly, prices of flowing oil (wellhead prices)
cover user cost—the impact on future net profits of current
production—and extraction cost, but they can be misleading. For example, price levels in the first quarter of 2004
have been heavily influenced by OPEC’s restraints on
output to keep the oil price in a desired range—hardly a
yardstick for measuring scarcity.6 Indeed, the need for this
kind of action indicates excess rather than tight supply. A
better scarcity measure is provided by trends in the inground value of reserves; these cast a longer shadow than
wellhead prices. Moreover, if there was a competitive
market in reserves, the reserve price less development
investment incurred represents the market value of an
undeveloped reserve. In turn, this equals user cost, the
value of the undeveloped asset in the ground relinquished
by its sale (Adelman (1991)).
Over the past decade or so, Morris Adelman and I have
had a go at putting together a price series for reserves in the
ground using North American data. Initially, we relied on
a fairly small sample of proven reserve sale and purchase
data (see Adelman and Watkins (1995)). Later, we have
had access to a more extensive database of US reserve
transactions (e.g., Adelman and Watkins (1997)).
We pursued this research for three main purposes: to
provide information about national income and wealth,
which includes oil and gas reserves; because in-ground
values (compared with replacement costs) are crucial in
assessing industry trends; and reserve values have important implications for the basic theory of mineral resources,
including testing propositions such as the Hotelling
Valuation Principle. Our most recent exhibit is Adelman
and Watkins (2003), where inter alia, we estimated a US oil
and natural gas reserve price series from 1982 to 2002. We
have now extended the series to include 2003 (Adelman and
Watkins (2005)).
Actual transaction data reflect appraisals by teams of
engineers, geologists, bankers, economists and investors.
The forecasts of prices, production and costs embedded in
their calculations may be refuted, but values at which
reserves actually change hands merit serious attention.
Money is being put on the line.
At first glance, evidence based on US transactions might
seem parochial. However, deregulation of US oil prices in
1981 effectively plugged the US market into the world
market; non-US corporations search for and develop oil in
the US, and US corporations have long gone abroad.
Hence, information on the competitive US market
implicitly provides a window on reserve prices in all
regions open to new investment in oil resources. This
includes most non-OPEC countries, and a few OPEC
countries.
6
On the problems of using the current price as scarcity measure, also see
discussion in Krautkraemer (1998, p. 2089).
ARTICLE IN PRESS
G.C. Watkins / Energy Policy 34 (2006) 508–514
In-ground oil price ($US/bbl)
In-ground oil price ($US/bbl)
Year
Nominal $ $2003a
Year
Nominal $ $2003a
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
7.13
3.37
6.95
7.74
5.10
4.40
5.69
4.61
3.64
4.44
4.14
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
3.54
2.90
3.81
3.67
5.01
2.85
3.59
3.55
5.75
5.74
8.17
10.22
4.75
9.60
10.60
7.08
5.98
7.55
5.81
4.38
5.23
4.81
4.07
3.31
4.27
4.00
5.45
3.12
3.87
3.68
5.85
5.92
8.17
Source: Adelman and Watkins (2003, Table B-2a) and Adelman and
Watkins (2005).
a
Expressed in US$2003 using US Producer Price Index.
My concern here is with information these data provide
on industry trends–does the reserve price time series, a
leading indicator of supply conditions, suggest that
reserves in an economic sense are becoming scarcer, or
more abundant, or show no particular inclination?
Table 2 shows the results of our latest analysis, including
2003; the reserve prices are also plotted in Fig. 1. The figure
reveals no visible secular trend in reserve prices, 1982–2003,
sometimes falling, sometimes rising, as they have recently–but to levels in 2003 only marginally higher than at the
previous peak in 1985 in money-of-the-day terms; in real
terms, the estimated 2003 reserve price is around 20%
below the 1985 peak.7 The reserve prices broadly reflect
changing perceptions about the world oil market, not the
US domestic market. Overall, the price series offers little
evidence of a nascent supply shortage.8 However, since
2000, reserve prices have moved to distinctly higher levels,
as field prices used in company evaluations have increased,
registering OPEC’s new found ability to keep wellhead
prices comfortably above $20/barrel.
We also computed the 1-year return to holding an asset
in the ground by comparing each year’s value of a unit of
reserve with the previous year’s, from which we subtracted
the 1-year risk-free discount, approximated by the 1 year
US Treasury bill rate. The achieved return premia so
calculated only exceeded an estimate of the minimum risk
premium for petroleum finding and development activities
in nine of 21 years, 1983–2003.9 If the original reserves in
7
The inflation index used is the Producer Price Index. Prices in real
terms would be higher if the US GDP or US CPI were employed.
8
Regressing reserve prices on time was not pursued—it seemed
superfluous. For discussion of price expectations embedded in the reserve
price series in relation to the world oil market, see Adelman and Watkins
(2003, p. 33).
9
The minimum risk premium adopted was the US Federal Reserve
Board 10-year treasury rate.
12.00
Reserve Price ($US/bl)
Table 2
Estimates of in-ground crude oil price, United States, 1982–2003
(nominal and real terms)
511
Nominal Prices
Real Prices (With US PPI)
10.00
8.00
6.00
4.00
2.00
0.00
1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002
Year
Fig. 1. Estimates of US oil reserve prices, 1982–2003.
the ground were fixed and depleted by consumption, the
unit value of what remains in the ground would increase
over time and owners would expect returns sufficient to
offset year over year annual risks. In 21 trials, fluctuations
can be expected: you win some, you lose some. But losing
12 times out of 21 is not consistent with perceptions of
growing scarcity (see Adelman and Watkins (2003, pp.
40–42) and Adelman and Watkins (2005)).
5. Analytical foundations
I discuss here two main approaches to analysing oil
reserves and production. One is a ‘life cycle’ technique,
predicated on work by Hubbert. The second simply applies
the economist’s notion of supply curves to a depletable
resource such as oil.
5.1. Hubbert approach
Much of the analytical framework underpinning the
view that oil is running out is based on Hubbert curves
purporting to plot the life of oil resources. Their shape is a
symmetrical uni-modal ‘Bell’ profile that grows, peaks and
then goes in to inexorable decline—see Fig. 2. Hubbert’s
seminal article published in 1962 (Hubbert (1962)) has
founded a cult still much in vogue.10 Yet several investigations find the inferred curve as far from symmetrical, with
the downward portion typically skewed outward to the
right.11
What is wrong with Hubbert’s construct in the context of
the life of oil as an economic commodity? In econometric
terms, Hubbert’s model is a classic example of omitting key
variables, specifically price and technology. More broadly,
in the real world, these variables drive the investment
process.
Various attempts have been made to graft economic
variables on to the Hubbert schema—e.g., see Cleveland
and Kaufman (1991). A pertinent question is: why attempt
to create these hybrids? To ask Hubbert curves to handle
10
Indeed a society, the Association of the Study of Peak Oil (ASPO), has
been founded; apparently Hubbert style modelers are predominant.
11
For example, see comments by Ryan (2003); also see Lynch (2002).
ARTICLE IN PRESS
G.C. Watkins / Energy Policy 34 (2006) 508–514
Production Rate
512
Ultimate
Cumulative
Production
Time
Fig. 2. Hubbert curve.
an economic commodity such as oil is akin to asking a
eunuch to sire a family.
An unfortunate feature of the Hubbert approach is that
it trumpets the notion of ultimate reserves. As illustrated in
Fig. 2, the stock is fixed; supply simply runs out: the last
barrel is produced. Exhaustion prevails.
The dictionary defines ‘ultimate’ as a ‘final or fundamental fact’. In that light, the elasticity displayed by
estimates of ultimate reserve estimates is remarkable.12 I
think it is a fair generalization that in virtually all instances
ultimate reserve numbers for regions investigated have
increased rather than decreased over time. This is not
surprising. It registers increasing knowledge.
The notion of ultimate reserves channels attention to the
wrong track. I’ve quoted Adelman’s comment about
resource exhaustion more times than I care to count, but
one more time won’t come amiss:
‘‘The total mineral in the earth is an irrelevant nonbinding constraint. If expected finding-development
costs exceed the expected net revenues, investment dries
up and the industry disappears. Whatever is left in the
ground is unknown, probably unknowable, but surely
unimportant: a geological fact of no economic interest’’
(Adelman (1990, p. 2)).
The many estimates of world oil ‘‘ultimate reserves’’,
optimistic or pessimistic, must all be dismissed because
they purport to measure what their sponsors cannot
possibly know: future science and technology. Although
it would be safe to assume technology will improve, one
cannot know with any precision how it will evolve. But one
can of course estimate volumes recoverable from currently
designated areas, under current conditions of knowledge.
Ultimate reserves, then, are unknowable. In the context
of economic analysis of oil supply, the less time spent on
efforts to estimate them the better.
Hotelling’s analysis of finite non-renewable resource
depletion generates rules governing flow equilibrium in
mineral output markets and stock equilibrium in asset
markets (Hotelling (1931)). It contemplated final exhaustion at a set time, with output falling to zero. The pricing
12
For example, in an earlier paper (Watkins (1992, p. 18)), I listed
estimates of Alberta ultimate natural gas reserves, 1957–1992, showing
they had continually increased.
implications of this model have been applied to the
industry as a whole. In my view, this distorts Hotelling’s
insightful work, work directed more at the firm level where
the focus is on a deposit of known, fixed quantity. Be that
as it may, an oft neglected aspect of Hotelling’s seminal
paper was the role of his demand function, which set a
maximum price, reached as output approached zero.
Whether exhaustion would be achieved in finite or infinite
time depended on the nature of the demand curve. In
general, the higher the price anticipated when the rate of
production becomes small, the more protracted the period
of operation (Hotelling, 1931, p. 142). Technological
change was seen by Hotelling as possibly leading to
introduction of substitutes.
The Hotelling model, then, was not just a supply side
phenomenon. Indeed, he anticipated that as production fell
and price rose, demand dynamics would increasingly
intrude.
5.2. Economic supply function approach
A preferable approach to the Hubbert framework would
be to focus more diligently on the economist’s notion of a
supply function, one readily applicable to oil reserves
stacked in order of ascending cost. A supply function
moves outwards in response to new discoveries and costsaving technological improvements and inwards as resource depletion proceeds—see Fig. 3. Whether an
aggregate crude oil supply function is shifting, and if so
in what direction, is at the crux of any assessment of the oil
industry outlook.
Direct measurement is difficult, and the results often
unreliable. Part of the reason is the poor quality and lack
of data. Certainly one attempt I made (with Shane Streifel)
at estimating supply functions for conventional oil was
constrained by data problems (Watkins and Streifel
(1998)). The data available dictated simple models of
reserve additions as a function of the inferred in situ price
of discovered but undeveloped reserves, and of time. The
price of undeveloped reserves, estimated as the price of
developed reserves less development cost, represented the
window of opportunity for exploration (and indicated user
cost—see earlier). The time variable was a surrogate for the
net impact of changes in ‘prospectivity’, resource depletion,
cost efficiency and technology.13 Functions were estimated
for 41 countries, using data for the period from the mid
1950s until 1994.
In broad terms, we found that outside of North America,
on balance non-OPEC countries had a rightward shifting
(expanding) supply function. North American conventional oil was probably moving in the contrary direction—
13
The simple reduced form supply function was RA ¼ a þ bðV2IÞ þ ct,
where RA was reserve additions in a given period, t was time, V was the
value of a barrel of developed reserve in the ground, I was development
investment per barrel of proved reserve, and a, b and c were estimated
coefficients.
ARTICLE IN PRESS
G.C. Watkins / Energy Policy 34 (2006) 508–514
Price of Reserves/unit of time
SD
S
Resource
Depletion
SA
New
Prospects,
Technological
Improvement
P
SD
S
SA
Reserve Additions/unit of time
Fig. 3. Oil reserve supply curves.
contracting: less would be found at a given price.14 Note a
leftward shift in a supply function does not mean reserves
will not continue to be added. Rather, it indicates that
returns from further exploration have started to diminish—
returns not offset sufficiently by technological or efficiency
improvements, or by opportunities to exploit new plays.
Supply conditions in OPEC countries could not be
depicted by the interaction of conventional supply functions with price; OPEC output restraint entails a rather
different model specification.
Smith and Paddock (1984) estimated economic oil
supply functions divided into two stages: a discovery
model and a production model. The discovery process
described the physical returns to exploration. The production model specified the economic costs of bringing new
fields on stream and likely production rates. In both stages,
the negative influence of resource depletion was modelled
explicitly. The models were applied to data for 37
individual regions around the world, from a 1978
perspective. The discovery model disclosed a large potential for new fields in most areas.
There have been other efforts. The pity is that they have
been so few and far between.
6. Concluding remarks
Three decades beyond 1973, oil reserves increased by
80% even though production has continually increased.
There has been less, not more, reliance on OPEC.
Indicators of resource scarcity do not provide evidence
that oil has been becoming scarcer.15 Instead, new plays,
more intense development of existing plays, allied with cost
saving and innovative technology, have offset resource
depletion. In short, Nature as Scrooge has to date met its
match in Knowledge’s Lady Bountiful.
14
For a list of the 41 countries, see Watkins and Streifel (1998, p. 35); for
a list of the ‘contractionary’ and ‘expansionary’ groups, see Watkins and
Streifel (1998, p. 45).
15
Krautkraemer (1998) reached a parallel conclusion in a more general
mineral industry context, not just for oil.
513
Can this stand-off between knowledge and depletion
over the past 30 years be assumed to continue? Will supply
always be plentiful? That is more than anyone could
pretend to know. Some day the balance may shift. The
great majority of giant conventional fields—many would
say all—may well have been found. Perhaps, the impact on
oil demand of economic development, especially in Asia
(India and China), is a harbinger. This degree of
uncertainty encourages agnosticism about whether technology and new knowledge will continue to keep the forces
of depletion at bay.16 At the same time, a generous
‘backstop’ of non-conventional oil supplies (oil sands,
heavy oils, oil shales) looms once returns become
sufficiently attractive.
A persistent change in the return to holding oil in the
ground, with a definite upward trend emerging in reserve
prices, would provide an early warning system. Indeed, the
recent upward trend validates OPEC’s success in meeting
its price targets, and beyond those levels, as demand
presses on aggregate world installed capacity. However,
recent wellhead price levels of over $50/bbl register
contrived not actual scarcity—a shortage price without a
shortage of in-ground resources.
Techniques to analyse oil supply should pay less heed to
Hubbert and more to the economic framework. Oil as a
resource is a gift of nature. In-ground recoverable reserves
are an economic commodity. They need to be treated as
such.
Acknowledgements
I acknowledge helpful comments from Morris Adelman,
Jeffrey Krautkraemer, Roland Priddle and James Smith—
the usual disclaimer applies.
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