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Are World's Oil Reserves Running Dry?
GRAND RAPIDS — Local energy expert Tom Fehsenfeld, president of Crystal Flash Energy, led a workshop discussion on the status of world oil reserves Wednesday, one of three workshops on energy issues held at Aquinas College last week.
Aquinas’ Sustainable Business Program, the West Michigan Environmental Action Council and the World Affairs Council of West Michigan hosted the event, which included an evening presentation on the need for U.S. energy independence.
Tom Leonard, executive director of the West Michigan Environmental Action Council, said the “working thesis” for the workshops was that U.S. national security requires less dependency on fossil fuels because they are located in unfriendly, threatened or unstable countries.
Fehsenfeld’s discussion was timely, considering the cost of crude oil had climbed to $50 a barrel the day before.
“It’s not a good time to buy crude oil, but it’s a good time to own it,” he said.
In his estimations, the world’s not likely to use up all its oil by 2016 as was predicted back in 1976. There’s really no physical shortage of crude oil at this time, but the truth is that nobody really knows what the true amount of oil reserves are, Fehsenfeld observed.
Proven oil reserves are located in the United States and in the Middle East — the “big gorilla” of oil reserves — Saudi Arabia, Kuwait, Iraq, Iran, and United Arab Emirates.
Even though U.S. oil reserves grew in the ’70s, ’80s and into the ’90s due to technological advances, the rate of oil discovery has been declining while demand for oil has been ever increasing. Worldwide, the big drivers for consumption are China and India, he noted.
“There’s a certain level of reserves oil companies like to maintain. As long as they have a comfortable cushion —say, a 15-year supply — there’s no motivation to search for oil,” he said. “It depends on how much people are willing to invest in the effort to find more oil.”
In the United States, crude oil
But no new U.S. oil refineries have been built recently for a couple of reasons, Fehsenfeld pointed out.
“Good profits were made in the ’70s and ’80s, then profits declined. A lot of major refiners are selling off their refineries because of declining profits. It’s simply that returns are too low and costs too high.”
Another reason is that it’s going to cost refiners a collective $200 billion to adjust to new government regulations coming down the pipe that mandate lower sulfur content, he said.
North America’s demand is growing despite its relatively flat
The U.S. Department of Energy estimated that in 2003, the United States held 2 percent of the world’s oil reserves, produced 10 percent of the world’s oil supply and consumed 25 percent of oil produced worldwide.
Conversely, in 2003, some 68 percent of oil reserves were spread across OPEC nations, which produced 41 percent of the world’s oil supply and consumed 8 percent of it.
The world oil reserve situation is a dynamic one that changes every day, Fehsenfeld said. Pricing is affected by a number of factors, including random events, consumption trends, politics, war and revolution, changing technology, environmental issues and public perceptions.
“I think fossil fuels will be with us for a long time,” he concluded. “I think there will be opportunities in the next 10 to 20 years to diversify U.S. energy sources.”
Alternative energy sources include hydrogen, fuel cells, solar energy, ambient energy, wind and hydropower and bioenergy. Another tactic is recycling the waste stream of used energy sources, Fehsenfeld said.
“Finally, I think we need to make sure government policy follows what we want for the future.”