The Stakeholders Who Estimate Oil Reserves

Ron Swenson
2000 February 21

Recently I was confronted by a query which plagues many who contemplate the future of global oil reserves. I have prepared an answer here for our readers.

Query: It seems as if there are so many different oil reserve estimates. You would think in this day and age we would have it narrowed down!?

There are numerous and conflicting estimates of global oil reserves. As might be expected, the source of information is largely what shapes each prediction, based on the underlying assumptions and rationale which drives each group that provides such estimates. The sources are flat-earth economists, governments, oil companies and independent geologists. You can take your pick.

Flat-Earth Economists
With apologies to economists who recognize the important role of science, I label as "flat-earth economists" those who, whether in academia, in business or in government service, base everything on market forces: they pay heed only to supply and demand, price, etc. For them, economic growth is a value that is never questioned. The standard sales pitch is "Throw enough money at it and the problem will go away." If you see a chart that shows an unrelenting upward trend of increasing population, energy consumption or even oil reserves build-up over the course of time (logically impossible for any depleting resource except in the context of accepted industry definitions), you know that the estimators are discounting the future as if it were largely irrelevant, even though the matter at hand is presumably to make a prediction of the future. Flat-earth economists make their findings with spreadsheets, working with precise and clean numbers rather than messy geology, which deals inevitably with the variability and uncertainties of nature. No matter what, there will always be more oil, so flat-earth economists make the assumption that higher prices will allow us to continue to find more of it, on into the indefinite future.

In the 1980's most OPEC countries increased their reserves on paper to improve their "production" quotas vis-a-vis the other members of the cartel. (See Now all the pertinent governments pass these falsifications around between each other. After all, no government wants to start a diplomatic incident by accusing another country of claiming false reserves! Apparently they hire flat-earth economists too because they conveniently cut off their charts before the time when the inevitable "production" decline begins, in order that they don't have to contemplate the down side. For example, see

Oil Companies
The leading oil companies publish well-written, formal annual reports on oil "production" and reserves. These reports are designed to impress shareholders -- no one in the top management of an oil company wants to upset the shareholders. Furthermore, since the majors typically buy oil from government-owned oil companies, they do not want to offend their suppliers by calling them liars, any more than governments would.

Independent Geologists
Geologists who are not in the employ of governments or oil companies, and who have spent a life-time exploring for oil, have heard all the stories and have seen all sorts of games being played. After being burned a few times for having jumped to conclusions about their data or someone's representations of the facts, they have learned what questions to ask their peers when it comes time to get down to serious business.

In recent years several geologists and engineers have gained access to the most accurate and extensive databases of oil reserves and have done the serious work of counting up all the known reserves in the world, field by field, nation by nation, until they have a picture of all reserves in the aggregate. Where dubious data or technical questions have arisen, they have contacted their peers in industry and government to get the straight story. Since it takes a lot of time to gather the necessary experience to distinguish fact from fancy, and considering the low tolerance in the oil industry for dissent, it is not surprising that much of this information comes from geologists who have reported their findings after retiring from positions in the oil industry.

One person who definitely was not afraid to speak his mind was Dr. M. King Hubbert, a brilliant scientist who stood by his convictions in the 1950's and beyond, when he singlehandedly developed a scientific rationale to obtain an accurate estimate of future oil supplies and fought for years with bureacracies to make accurate information available to policy-makers. (See

For a graphic summary of estimates from many different sources, see

edited 2000 February 28