It is generally accepted in the industry, as I understand it, that we have probably found all of the major oil reserves that we are going to find. That doesn't mean there aren't major reserves out there to develop â such as offshore Sao Tome or deep in Siberia. It does mean that, most likely, knowing what we know about the Earth's geology, there probably is not another Ghawar formation (the world largest petroleum deposit, located in eastern Saudi Arabia) lurking out there yet to be discovered.
This, of course, could be very wrong. But the bet, right now, is that it is not.
Sure, there are alternatives. There are huge bitumen deposits in Venezuela and Alberta, tar sands that combined hold more than twice the current estimated world reserves of liquid crude oil. But bitumen is costly to refine, a potential environmental nightmare to extract, and right now, only a tiny fraction of the crude in either the Athabasca oil sands or the Orinoco Belt can be recovered.
There's a lot of shale in North America, and the process to synthesize crude from shale is fairly old and well known. It is also water intensive, and not terribly economical right now (because most of the shale is buried out West, where there is very little water). The technology is pretty well established to make synthetic crude oil from coal (lots of North American coal too) or natural gas, or even turkey guts or pig manure â if the price is right.
But none of that matters, because while synthetic crude, whether made from bitumen or natural gas, makes great diesel fuel, kerosene and fuel oil (some buses in Washington, D.C., for example, are powered by diesel synthesized from natural gas), it tends to make really lousy gasoline. Or very little gasoline. And I cannot emphasize enough â right now, gasoline is what everyone wants. Gasoline is what makes the world go round.
So the question is not "when will the crude oil run out?" but "how can we best use the petroleum we have until other economically viable alternatives present themselves?" (I'm not holding my breath for fuel cells any time soon.) That becomes what folks here in Washington call a "policy question," which leads to think tankery, publication of "papers" and funny little books called monographs, conferences, government initiatives, and all manner of other sundry evils.
We cannot ignore the fact that this an industry interlaced with government from top to bottom, whether we are talking about the huge state-owned firms of the big producing nations or our own heavily regulated supermajors. That is the reality, lamentable and regrettable as it is. But as libertarians, we need to remember a few things. First, whatever ends up replacing petroleum will come in its own good time, later than we'd like but probably sooner than we expect. It will come because it stores energy and power better than gasoline does and more cheaply to boot. It will come with some tremendous benefits and some unfortunate drawbacks. Consider as you lament the evils of crude oil: the fairly accidental discovery of kerosene and expansion of the refining process in the second half of the 19th century saved whales from an early mass extinction while at same time making nighttime light and winter heat affordable to even the most impoverished parts of Asia, Africa and Latin America. Gasoline itself was originally a waste product, largely unused until the invention of the internal combustion engine, and automobiles made for cleaner streets (no more manure) and safer farm equipment, given that farmers no longer had to wrestle with motors that had minds of their own. Kerosene itself languished as an unloved byproduct of refining for several decades until the invention of the jet engine.
Second, that new fuel will probably not come as the result of government-sponsored research. Government efforts to target new development â whether hydrogen fuel cells, hybrid engines, coal gasification, ethanol subsidies â may contribute some, but the kind of thinking and investing needed to find or make that new fuel probably cannot be done by government bureaucrats, scientists or regulators, who can only think incrementally and usually only consider efficiency and conservation, rather than entirely new ways of doing things.
I don't necessarily trust technology, but I do trust human ingenuity. Civilization as we know it will grind to a halt without the energy we derive today from crude oil, and that's in and of itself is motivation enough to make sure that future energy is widely available at prices people can afford.