Peak oil – OPEC reserves exaggerated by massive amount?

Peak oil now? The world’s oil reserves have been exaggerated by up to a third, which would be a massive amount, according to Sir David King, the UK Government’s former chief scientist, who has warned of shortages and price spikes within years.

The scientist and researchers from Oxford University argue that official figures are inflated because member countries of the oil cartel, OPEC, over reported reserves in the 1980s when competing for global market share.

Their new research argues that estimates of conventional reserves should be downgraded from 1,150bn to 1,350bn barrels to between 850bn and 900bn barrels and claims that demand may outstrip supply as early as 2014. The researchers claim it is an open secret that OPEC is likely to have inflated its reserves, but that the IEA, BP, the EIA and World Oil do not take this into account in their statistics.

“It is necessary to investigate ambiguities and sources of error that are broadly acknowledged but not taken into account in public data due to political sensitivities,” the researchers said. The paper also raises concerns that public statistics have started to incorporate non-conventional reserves such as the Canadian tar sands, where oil and gas are much more difficult to extract and may never be economically attractive to develop.

Sir David said that although the IEA was doing a good job of warning that more investment in oil and gas exploration is needed, governments need to pay more attention to independent research.

“The IEA functions through fees that are paid into it by member companies and has to keep its clients happy,” he said. “We’re not operating under that basis. This is objective analysis. We’re not sitting on any oil fields. It’s critically important that reserves have been overstated, and if you take this into account, we’re talking supply not meeting demand in 2014-2015.”

The concept of “peak oil” has gained traction in recent years, although energy companies such as BP and Shell insist that production will be able to keep pace with growing Asian energy needs.

Sir David said he was “very concerned” that Western governments were not taking the concept of “peak oil” (where demand outstrips production) seriously enough, while China is throwing all its efforts into grabbing as many energy resources as possible.

Tags:  oil, OPEC, peak oil, reserves, UK