Contributed by Robert Lyman © 2023. Robert Lyman’s bio can be read here.


“Peak Oil” refers to the hypothetical point at which global crude oil production will hit its maximum rate, after which production will start to decline.  At the forthcoming COP 28 conference in Dubai, a major agenda item will concern whether all parties to the Framework Convention on Climate Change will commit to curtail financing of new hydrocarbons development, thus aiding to advance the arrival of “peak oil”.

The International Energy Agency June 2023 Oil Report projected global oil demand to peak “before the end of the decade”.

The exact size of the global oil resource is not definitely known. Experience over many years has shown that initial resource estimates have been continually revised upwards as new discoveries are made, fields are better delineated and new technologies applied. It is important to understand the terminology. Oil reserves are the amount of crude oil a country or region has that can be economically produced with current technology. Oil resources include oil reserves plus the quantities of oil in the ground that are considered either “conventional” (susceptible to development through well bores using minimal stimulation) and “unconventional” (resources whose development also require multistage hydraulic fracturing or other advanced extraction techniques).

Current estimates are that global oil reserves are between 1.4 trillion barrels and 1.73 trillion barrels. The world has a reserve to production (R/P) ratio of somewhere between 38 and 46 (i.e. 38 to 46 years of production at current rates left).

There is a widespread international effort to find and develop more oil. According to a June 2023 report by Energy Monitor, there are now 47 countries with planned new oil and gas fields.

In 2012, the United States Geological Survey assessed undiscovered oil and gas resources. For undiscovered, technically recoverable oil resources, the mean total for the world was 565.3 billion barrels of crude oil. There remains a large potential for increasing oil production from existing fields by improving the recovery factor, or RF (the percentage of initial oil in place that is recovered through better technologies). The average RF from mature fields around the world is somewhere between 20% and 40%. The means to do this now are a combination of enhanced oil recovery (EOR) and improved oil recovery (IOR). Using combinations of EOR and IOR technologies it has been possible to achieve RF’s of 50% and 70% for some fields. In other words, in many cases it is possible to almost double the recovery factor, thus potentially doubling the existing conventional oil reserves.

Estimates of the size of the unconventional oil resource base are more difficult. Using the statistics of the US Geological Survey and the US Department of Energy, the global unconventional oil resource base was 450 billion tonnes (3.3 trillion barrels).

The potential ultimately recoverable oil resources are thus a combination of currently discovered conventional reserves (1.4 trillion-1.73 trillion barrels), plus undiscovered conventional reserves (565 billion barrels) plus unconventional resources (3.3 trillion barrels). The total, which must be regarded as speculative, is in the range of 5.1 trillion to 5.4 trillion barrels. At current rates of consumption, that could supply the world’s needs for close to 150 years. From this it is reasonable to conclude that the potential consumption of oil in the world will not soon be resource-constrained.

Development of additional oil reserves relies upon a favourable investment climate for oil companies, high enough prices to supply the necessary cashflow, and supportive government policies. The International Energy Agency 2023 report indicated that upstream oil and gas investment rose by 11% in 2022 to over US $450 billion and is expected to rise by 7% to US $500 billion in 2023. However, in 2015, new capital expenditures constituted over 90% of cash flow, but that share steadily declined to less than 50% in 2022. Among the reasons cited by the IEA was “uncertainty about future oil demand”, but global oil demand continues to rise at over one million barrels per day per year. A more accurate reason may be companies’ concern about the adverse impact of western countries’ anti-hydrocarbons climate policies.

Absent intrusive climate policies, the world would inevitably go through a long transition in which increasingly more expensive oil was supplanted by natural gas and a range of other competitively-priced energy sources. Climate policy, however, seeks through taxation, regulation and central planning to control the pace of transition. It also seeks to remove natural gas from the equation as a transitional fuel.  In so doing, climate policy risks creating a situation of both dire scarcity and extremely high energy prices that may persist for a long time. It remains to be seen, of course, whether the public in democratically-governed countries will tolerate such a transition.

Note: The following reported is an updated version over the original Sept. 11, 2023 report to correct an error on page 6.