Forecasting the limits to the availability and diversity of global conventional oil supply: Validation

Oil and related products continue to be prime enablers of the maintenance and growth of nearly all of the world's economies. The dramatic increase in the price of oil through mid-2008, along with the coincident (and possibly resultant) global recession, highlight our continued vulnerability to future limitations in the supply of cheap oil. The very large differences between the various estimates of the original volume of extractable conventional oil present on earth (EUR) have, at best, fostered uncertainty of the risk of future supply limitations among planners and policy makers, and at worse lulled the world into a false sense of security. In 2002 we modeled future oil production in 46 nation-units and the world by using a three-phase, Hubbert-based approach that produced trajectories dependent on settings for EUR (extractable ultimate resource), demand growth, percent of oil resource extracted at decline, and maximum allowable rates of production growth. We analyzed the sensitivity of the date of onset of decline for oil production to changes in each of these input parameters. In this current effort, we compare the last eleven years of empirical oil production data to our earlier forecast scenarios to evaluate which settings of EUR and other input parameters had created the most accurate projections. When combined with proper input settings, our model consistently generated trajectories for oil production that closely approximated the empirical data at both the national and the global level. In general, the lowest EUR scenarios were the most consistent with the empirical data at the global level and for most countries, while scenarios based on the mid and high EUR estimates overestimated production rates by wide margins globally. The global production of conventional oil began to decline in 2005, and has followed a path over the last 11 years very close to our scenarios assuming low estimates of EUR (1.9 Gbbl). Production in most nations is declining, with historical profiles generally consistent with Hubbert's premises. While new conventional oil discoveries and production starts are expected in the near term, the magnitudes necessary to increase our simulated production trajectories by even 1.0% per year over the next 10 years would represent a large departure from current trends. Our now well-validated simulations are at significant variance from many recent "predictions" of extensive future availability of conventional oil.