Will we run out of oil?

Sep 7, 2022

Question: Will we run out of oil?

Answer: No. 

It wasn’t too long ago when there was a concern we would run out of oil. After all, according to the U.S. Energy Information Agency (EIA), the world consumes 100.7 million barrels of the stuff every day with the US consuming daily 18.1 million barrels (18%) of that total. (A barrel is 42 gallons.) 

However, the thinking is changing.  Rather than the world experiencing peak supply one day -- meaning there will come a day when the world can no longer supply what is demanded, the thinking is now there will come a day when we experience peak demand -- meaning there will come a day when the world demands less oil than what can be supplied.

So what is behind the change in thinking?  Simply put -- clean energy. Clean energy is displacing oil as a source of energy.  For example, the International Energy Agency (IEA) says the world uses about 49% of world oil production for road transportation.  As road transportation transition continues to electrification with EV's and electricity production moves to the ever cheaper solar and wind power (along with ever improving storage technology to deal with intermittency), the demand for oil will decline.

Let’s look at how much oil we have, the rate we are consuming it, and see if can figure out we when our known oil supply runs out.

According to the EIA, the world has 1.662 trillion barrels (yes, that's trillion) of proven reserves in 2020. The EIA also reports the world is consuming oil at a rate of 100.7 million barrels a day in 2020.

Here's the arithmetic to get how many years of oil we have given the current proven reserves and consumption rate:

1,662,000 ,000,000 proven oil reserve barrels divided by 100,680,000 barrels per day consumed equals 16,508 days or 45 years.

Given the anticipated consumption decline recognized even by those in the oil industry, that 45 year timeline is going to be longer.  And the faster we move off oil for powering our road transportation, the longer that timeline gets.

So, will we run out of oil?  Nah.