When I was a teenager I grew up with my grandmother in a remote barangay, it is so remote that even today the electricity is still until midnight and there are no electricity during the day. My grandmother used to stock gasoline on her toilet for selling, the fume of the gasoline serves as the deodorizer of the room. But any way one day it came up into my mind, where this stuff came from? and when this flammable liquid will run out ? one day. My question was never answered that day,

So when this flammable liquid will run out?

Since antiquity, natural petroleum seeps were known, and the petroleum collected there was used for a variety of purposes. Not until the mid-nineteenth century, however, was any formal effort made to extract the oil for commercial use. Petroleum has become steadily more useful and valuable since the first oil well was drilled by Edwin Drake (1819-1880) in 1859. The first major oil fields were discovered in Pennsylvania and Ohio, with major strikes in Texas and Oklahoma to follow in 1901. Shortly after, the first oil concessions in Persia (now Iran) were granted, and the race for Middle East oil was on. Since that time, the discovery and exploitation of oil in the Middle East has had a profound influence on modern society and politics. Oil created vast fortunes and industrial empires, launched at least one war, promoted the widespread use of petroleum, gave birth to OPEC, realigned twentieth-century politics, and much more. It’s safe to say that the huge reserves found in the Middle East played a tremendously important role in shaping the world we live in.

Oil in middle east.

In 1901, British businessman William D’Arcy convinced the Persian government to award him a concession for oil exploration, extraction, and sales in exchange for £20,000 and 16% of profits over the next 60 years. At one point when he was on the verge of bankruptcy, D’Arcy appealed to the British government for help; they agreed to assist him, fearing he might otherwise sell his concession to a foreign country such as Russia. Britain, still a great power at that time, also wanted to maintain a political presence in the Middle East. The British government pressured an existing British oil company, Burmah Oil, to give D’Arcy the financial assistance he needed in 1905; shortly thereafter, large amounts of oil were found.

In the following years, oil was discovered in a great many places in the Middle East: the Arabian Peninsula, beneath the Caspian Sea, beneath what would become the nations of Iraq, Kuwait, the United Arab Emirates, and others. In 1944, a prominent petroleum geologist named Everette DeGolyer reported to the U.S. government that he was certain the Middle East nations were sitting atop at least 25 billion barrels of crude oil, at least 5 billion of which were in Saudi Arabia. Not reported at that time were his unofficial estimates of up to 300 billion barrels of oil'”a third of which he thought underlay Saudi Arabia. In a report to the State Department, DeGolyer’s team commented that “The oil in this region is the greatest single prize in all history.”

To begin with, the Middle East does not have two thirds of the world’s oil reserves.

The oil reserve estimates refer to a narrow category of “proven” oil reserves, not to “every … barrel of oil in the world” According to a US Geological Survey report quietly published in 2000, there is more oil outside the Middle East than inside the region. Certainly two thirds is not at all accurate — It’s 54 percent of identified reserves, possibly 40 percent of ultimately recoverable reserves, and possibly 30 percent or less if you include unconventional heavy oil fields. The Middle East does not have two thirds of the world’s oil — it has 54 percent of identified reserves, or, if you look at ultimately recoverable reserves, 39 percent. Kuwait — not Iraq — has the second largest identified oil reserves in the world with 99.4 billion barrels, compared to 96.5 for Iraq, according to USGS. Saudi Arabia may have one quarter of the world’s identified oil reserves, as the oil industry claims, but it has only about 16 percent of all ultimately recoverable reserves, according to the USGS. In the report that accompanies the reserve estimates, USGS did not include “unconventional” oil such as Venezuelan heavy crudes. However, the agency did say that these unconventional sources “are approximately equal to the Identified Reserves of conventional crude oil accredited to the Middle East.” In other words, according to the USGS, and employing a conservative estimate for unconventional oil, the Middle East probably has anywhere from 29 to 35 percent of ultimately recoverable world oil reserves — not two thirds, as is commonly claimed by the oil industry.

The World

It has taken between 50-300 million years to form, and yet we have managed to burn roughly half of all global oil reserves in merely 125 years or so. The world now consumes 85 million barrels of oil per day, or 40,000 gallons per second, and demand is growing exponentially. Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico. Global oil production is now also approaching an all time peak and can potentially end our Industrial Civilization. The most distinguished and prominent geologists, oil industry experts, energy analysts and organizations all agree that big trouble is brewing.

The world is not running out of oil itself, but rather its ability to produce high-quality cheap and economically extractable oil on demand. After more than fifty years of research and analysis on the subject by the most widely respected & rational scientists, it is now clear that the rate at which world oil producers can extract oil is reaching the maximum level possible. This is what is meant by Peak Oil. With great effort and expenditure, the current level of oil production can possibly be maintained for a few more years, but beyond that oil production must begin a permanent & irreversible decline. The Stone Age did not end because of the lack of stones, and the Oil Age won’t end because of lack of oil. The issue is lack of further growth, followed by gradual, then steep decline. Dr King Hubbert correctly predicted peaking of USA oil production in the 1970’s on this basis. It is now widely acknowledged by the world’s leading petroleum geologists that more than 95 percent of all recoverable oil has now been found. We therefore know, within a reasonable degree of certainty, the total amount of oil available to us. Any oil well has roughly the same life cycle where the production rate peaks before it goes into terminal decline. This happens when about half of the oil has been recovered from the well. We have consumed approximately half of the world’s total reserve of about 2.5 trillion barrels of conventional oil in the ground when we started drilling the first well at a current rate of over 30 billion a year, meaning the world is nearing its production plateau.

Worldwide discovery of oil peaked in 1964 and has followed a steady decline since. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. There have been no significant discoveries of new oil since 2002. In 2001 there were 8 large scale discoveries, and in 2002 there were 3 such discoveries. In 2003 there were no large scale discoveries of oil. Given geologists’ sophisticated understanding of the characteristics that would indicate a major oil find, is is highly unlikely that any area large enough to be significant has eluded attention and no amount or kind of technology will alter that. Since 1981 we have consumed oil faster than we have found it, and the gap continues to widen. Developing an area such as the Arctic National Wildlife Refuge in Alaska has a ten year lead time and would ultimately produce well under 1% of what the world currently consumes (IEA).

Oil is now being consumed four times faster than it is being discovered, and the situation is becoming critical.

The consumption of a finite resource is simply a finite venture and the faster we use the quicker it peaks. Saudi Arabia is a major oil producer with 73% of all incremental world demand being met by this country. The worrying fact is that 90% of their production comes from only 5 mega fields (one is the Ghawar field which is the biggest ever discovered), and are all at risk of unplanned production collapse. In 2004 there were warning signs of production falling into depletion. For years, Aramco, the Saudi national company, use secondary recovery techniques by injecting enormous amounts of seawater (7 million barrels daily) into their biggest field to boost production. These methods have only temporary effects, and lead to accelerated rates of depletion in the future.

An imminent peak and sharp decline in oil production could cause a worldwide recession.” U.S. GAO ‘”2007

By 2012, surplus oil production capacity could entirely disappear.. — ” U.S. Department of Defense ‘”2008 & 2010.

Between 2005 and 2008 conventional oil production ceased to grow, .. — ” Global Witness Foundation ‘”2009

A global peak is inevitable. The timing is uncertain, but the window is rapidly narrowing.” UK Energy Research Centre -2009

The next five years will see us face — the oil crunch.” UK Industry Taskforce on Peak Oil and Energy Security ‘”2009

While there is no agreement yet on the exact date that world oil production will peak, the degree of consensus among them is quite remarkable. Out of 21 studies, the statistical mean date is 2013 (excluding some of the biased oil company estimates), suggesting that the world may be facing shortfalls much sooner than expected.

Recently, CNN and Britain’s Independent also point out the reality of Peak Oil, acknowledging that world oil and gas reserves are as much as 80% less than predicted.

At a current average global consumption growth rate of 2% annually (1995-2005), by 2025 the world will need 50% more oil (120 mbd), and the International Energy Agency (IEA) admits that Saudi will have to double oil production to achieve this. And that’s not even taking into account that 80% of the world is only just starting to use oil & gas

Based on Simmon’s analysis, sudden and sharp oil production declines could happen at any time. Even under the most optimistic scenario, Saudi Arabia may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand. There is no likely scenario that some new frontier can replace Middle East oil declines.

Senior Saudi energy officials have privately warned US and European counterparts that Opec would have an “extremely difficult time” meeting demand. Saudi Arabia calculates there is a 4.5m b/d gap between what the world needs and what the kingdom can provide. Repeated promises for increases in production have consistently failed to materialize.

‘Era of Easy Oil is Over’

Exxon Mobil Corporation, one of the world’s largest publicly owned petroleum companies, is the most forthright of the major oil companies having had the courage and honesty to quietly publish the declining discovery trend, based on sound industry data with reserve revisions properly backdated. Furthermore, the company is running page-size advertisements in European papers stressing the immense challenges to be faced in meeting future energy demand, hinting that the challenges might not be met despite its considerable expertise. Chevron recently joined their campaign publishing an advertisement in national newspapers stating that the ‘Era of Easy Oil is Over’

The arrival of Peak Oil may be slightly delayed if worldwide demand for oil would fall. A global recession can hit demand for oil based products, independent of oil prices and is likely to be triggered by the global real estate bubble. If that bubble would burst, the loss of paper wealth would have a devastating effect on consumer spending and GDP. This would result in spare capacity building up again. Furthermore, the high price of crude itself can dampen demand. This problem is particularly noticeable in governments offering energy subsidies. This decreased consumption is not so obvious in cash-rich nations such as the USA or the EU, but it is there in a smaller measure. Nevertheless, this dampening adjustment would only be short lived and simply postpone the inevitable, only ensuring a steeper and more uncontrollable decline, but I acknowledge the possibility.