The correct assessment of global oil reserves would allow us to judge whether we reached global Peak Oil. Unfortunately, while the definitions are clear, oil reserve figures remain ambiguous. There is good reason not to put too much trust into the official “proven reserves” figures.
Oil reserves are the cornerstone of Peak Oil theory. To determine whether global Peak Oil is nowadays a reality, we must focus on oil reserves. Are we halfway through our oil reserves and unable to expand production or is there still more to come?
Unfortunately, the more one researches oil reserves, the less clear the picture becomes. That’s why I’d like to start this chapter with two short stories.
I wrote my diploma about weapons of mass destruction in Arab countries. Iraq was one of the countries I had to focus on. This was back in 2001. As the US war against Iraq in March 2003 loomed, I knew exactly how many medium range SCUD missiles Iraq had. They had purchased 819 SCUDS from the former Soviet Union. UNSCOM, the organization formed by the United Nations to disarm Iraq, reported that two of those 819 missiles were still unaccounted for, so they were either stored at some hidden place inside Iraq or destroyed and the Iraqis were unable or unwilling to show any evidence as to what had happened with those missiles.
This seemed rather vague to me. It amounted to sentences like “they may still have a quantity of x or may still possess a quantity of y, but no one knows for sure”. I used to categorize my sources according to their reliability. This is one thing every intelligence agency does. German Federal Intelligence (known as BND or Bundesnachrichtendienst) for example categorizes its human sources (a pretty nice term for a spy) with grades from A to F. A source with a grade of F is maybe mentally ill, a heavy drug abuser and known to have told outright lies in the past. A source with a grade of A is simply the perfect informer. Of course, there are normally neither grade A sources (this is simply too good to be true) nor grade F sources (who needs unreliable story inventors?).
UNSCOM was a very good source; they didn’t know everything, but what was stated by UNSCOM was proven by facts. When it comes to the world of oil reserves, there is nothing similar to UNSCOM. It is even worse, you have to assume that there are some sources which would get a grade F, but the data they provide on their oil reserves is treated like the word of the mighty Lord, no one really challenges it. Matthew Simmons, the former investment banker who wrote “Twilight in the Desert” once described reserve estimation as “voodoo”. Coincidentally I know one “voodoo master” personally, as I once had to write an article about him for the newspaper I worked for, and the voodoo guy seemed to me more trustworthy than the guys estimating today’s oil reserves. He truly believed what he told me.