The Declining Trend of World Oil Reserves

Oil reserves basically refer to the estimated quantities of crude oil, which are claimed to be recoverable under the existing conditions of economy and global operations. Now, the most important question facing economists and geologists all across the globe is, “how much of the Earth's reserve of oil remains?” Although a simple question, it is important with a complex answer.

For past many years, British Petroleum (BP) has been the major source for providing accurate and authentic data about the status of the world's energy reserves in its Annual Statistical Review of World Energy. And, the current scenario of World oil reserves projected by BP does not look too bright! Therefore, before you plan to invest in the oil sector, seek some good investment advice from a reliable financial advisor.                                        

Many aspects of human life are dependent on liquid fuel resources; therefore the foreseen oil crisis is expected to affect all segments of world's economy. The projected status of energy-demand deficit has the potential to outshine climate change as the driving force for sustainable development. For the first time in last 10 years, BP has reduced its estimate of the world's proven oil reserves in its current Annual Statistical Review of World Energy.

BP’s has pointed out that the global reserves are more than enough to meet the current production levels for the next few decades, but accessing the oil is becoming more difficult due to high exploration and production costs, and also because of more state control of the production. According to the reports, oil reserves have fallen by three billion barrels to 1.258 trillion barrels by the end of 2008 from a revised 1.261 trillion, reported at the end of 2007. Whatever increase took place in Vietnam, India, and Egypt has been offset by these declines in the countries, including Russia, Norway, and China.

The analysis of BP has noted a large structural shift in the world's oil output. According to observations, the production in the industrialized countries, almost flat from 1996 to 2001, is fast moving towards a declining trend. This is assumed to be partly due to the falls in the UK, Norway, and Mexico. As per the analysis, the primary problem is not the quantity of aggregate resources, but matching the global supply and demand on a yearly basis in terms of resource exploitation.

The review has pointed out that the global oil production in 2006 had risen by 0.4 percent to 81.66 million barrels per day (bpd), a meager increase from 81.25 million bpd in 2005, lowest in last five years. It says that the world oil production would continue to grow to meet the demands, but growth is expected to remain concentrated outside the industrialized countries, in regions where state oil companies dominate.

The BP review has found that global oil consumption has declined by 0.6 percent last year; the first decline since 1993 and the largest since 1982. According to data, the primary energy consumption has slowed significantly in most of the regions. This could be accounted to the rise in crude oil prices due to an unexpected drop in the US inventories.

As a result, investment in the global oil-and-gas sector is expected to fall by more than 20% this year because the producers are avoiding spending for fear of price volatility. Thus, if you opt for sound investment advice from a reliable financial advisor, he may suggest you to avoid this sector for investment or be careful with your investment decisions within this sector. Seeking investment ideas and investment help is essential in the current scenario of global oil economy.

From the above discussion, it could also be said that the crisis of world's oil reserves is largely human and not geological. Therefore, it is imperative to face the reality and at least make some plans for what seems to be one of the biggest economic, social, and political discontinuities of all time.