Oil is a finite resource that cannot be replenished once it is extracted and used. With global oil consumption continuing to rise, there is much debate around when we might finally run out of economically recoverable oil reserves. Understanding when we may face an oil shortage is key to planning for our energy future.
Why is oil running out?
Oil is a fossil fuel formed from the remains of plants and animals that lived millions of years ago. It cannot be replaced once it is used up. Oil fields also tend to follow a typical production curve, with output rising after discovery, reaching a peak and then declining as reserves are depleted. This means oil production from any given field naturally declines over time.
Additionally, the world’s oil resources are not evenly distributed. Most remaining reserves are concentrated in just a few countries. The world’s largest oil producers are facing natural production declines from their mature fields. New discoveries are not keeping pace with production. The countries with the biggest reserves are also using more of their own oil rather than exporting it. This puts greater pressure on other producing regions to meet future demand.
When will we run out of oil?
Predicting exactly when global oil supplies will run out is difficult, as there are many complex factors in play. However, various experts have made estimates based on current proven reserves and projected demand.
- BP estimates there are around 1.7 trillion barrels of proved oil reserves remaining globally.
- The world currently consumes around 100 million barrels per day.
- At this rate of consumption, BP estimates the world has around 50 years of oil left.
However, this does not mean oil will suddenly run out in 50 years. Output will gradually decline rather than stopping completely. New discoveries and technological advances could also boost reserves over time.
OPEC predictions
OPEC, which produces around 40% of the world’s oil, estimates we have much more than 50 years left. In its 2020 World Oil Outlook, it predicted:
- Global proven oil reserves will last another 54 years at current production rates.
- Total remaining recoverable oil resources could last around 139 years.
This factors in future discoveries and technological improvements that boost recoverable reserves over time. However, OPEC acknowledges oil demand will peak by around 2040 due to policies to reduce fossil fuel use and improve energy efficiency.
IEA forecasts
The International Energy Agency (IEA) forecasts that:
- At 2019 consumption levels, global oil reserves would last around 50 years.
- But demand is projected to increase around 12% by 2040 under current policies.
- This would shorten the reserves lifespan to only around 47 years.
After 2040, the IEA expects oil demand will begin to decline due to climate policies and improving vehicle efficiency. This could help extend reserves, unless production falls faster.
When will oil production peak?
While estimates vary on when oil might run out, experts broadly agree that global oil production will inevitably reach a peak. After this peak, output will progressively decline as reserves deplete. Predictions for when the peak might occur include:
- The IEA predicts oil demand could peak around 2030-2040 under climate policies to curb oil use for transport.
- OPEC expects peak oil supply will occur shortly after 2040.
- Some experts argue the peak already occurred in 2008, when production reached around 70 million barrels per day. Output has remained stuck around this plateau for over a decade since.
Whenever the peak occurs, production is set to gradually fall after this point. So global supply may struggle to keep up with demand in the decades following the peak. This could lead to price spikes and oil shortages around the world.
Will we face an oil crisis?
Falling oil production after the global peak could lead to an oil supply crisis. As the gap between supply and demand widens in the years after the peak, shortages may occur. This could cause prices to spike to very high levels.
However, it is unlikely we will suddenly “run out” of oil completely at any point. Production will instead gradually decline annually as reservoirs are depleted. The crisis may arise from failing to control demand as supplies tighten globally.
Various experts have warned an oil crisis could arise in the coming decades if we do not reduce dependence on oil in time. The years immediately following the peak could be the most challenging if we have not prepared other energy sources.
To avoid a crisis, the IEA recommends countries take measures to cut oil consumption for transport and diversify energy supplies towards lower carbon options. This would enable a managed decline away from oil dependence.
When will different countries peak?
Oil production will peak at different times in different countries and regions:
United States
The U.S. experienced its oil peak in 1970, when production reached 9.6 million barrels per day. Output declined over the next 40 years, falling to under 5 million barrels per day in 2008. The shale boom helped restart growth, with production climbing back over 12 million barrels per day in 2019. However, most shale oil wells decline quickly, suggesting this surge may be temporary.
Saudi Arabia
Saudi Arabia is relying heavily on a few large, aging fields. The Ghawar field alone accounts for around half its output. The IEA predicts the country faces a production peak by 2025-2030 as these mammoth fields decline. After this, output could fall by over 3% per year.
Russia
Russia’s oil production peaked in 1988 at 11.5 million barrels per day during the Soviet era. After collapsing following the fall of the Soviet Union, output rebounded over the last two decades. Russia’s production plateaued around 10.5 million barrels per day during 2016-2020. Declining mature fields could cause it to peak again within five years.
Norway
Norway’s oil production peaked in 2001 at 3.4 million barrels per day and has more than halved since then. Depleting reserves in the North Sea have caused a steady output decline averaging 6-7% per year.
United Kingdom
The UK is past its oil peak, with production declining every year since 1999. Output has fallen from a peak of 2.9 million barrels per day to around 0.9 million barrels in 2020.
Global efforts to tackle oil dependence
Running out of oil may still be decades away. But in recent years, concern over climate change has driven greater efforts globally to reduce oil consumption and transition to cleaner energy sources like renewables:
- Many countries have pledged to reach net zero carbon emissions by 2050. This will require phasing out most fossil fuel use.
- Laws mandating greater use of renewable energy for power generation, like wind and solar, are accelerating change.
- Electric vehicle use is rising rapidly, cutting demand for oil in the transport sector.
- More than 20 countries have pledged to phase out sales of new petrol and diesel cars, most by 2035-2040.
While oil is vital today, it looks set to enter terminal decline within the next 20 years. But with managed transition policies, we may be able to avoid an oil crisis.
Conclusion
Predictions vary on exactly when oil might run out or when production will peak. But reserves are finite and decline is inevitable. At current consumption rates, global oil reserves could last around 50 years or slightly more. However, output will begin declining long before then after reaching the global peak. When this peak occurs is debatable, but many experts expect it will be before 2040.
Falling production after the peak leaves the world vulnerable to oil shortages and extreme price spikes. Avoiding an oil crisis will require curbing demand growth and diversifying energy sources to phase oil out of transport use. While oil will remain important for years, planning the transition to alternatives is crucial to secure our energy future as oil supplies steadily diminish.