We discussed the shortage of oil earlier in this chapter but gave short shrift to natural gas, which supplies as much energy as oil, as seen in Fig. 2.1. That is because gas and oil mostly occur in the same places, are mined the same way, and are similarly depleted. We also ignored the minor overlap between oil and gas: oil can be converted to propane and butane gases, which we use for camping and power in remote houses; and gas can be liquefied at low temperatures for more convenient transport as LNG (liquefied natural gas). In this section, we will again consider these fuels together as we consider the various proposals for extending their supplies.

The price of oil can jump wildly, as it did in 2008-2009 from higher than $140 to less than $40 per barrel, and it can jump back. The price of gasoline follows, and this has a great effect on the economy as people travel less and buy fewer large cars. The gas crisis of 1973 even triggered legislation setting the speed limit in the USA at 55 miles per hour. These rapid changes are not our concern here; we are worried about the end of oil and gas altogether. In 2007, BP (British Petroleum) reported that proven reserves are 15% higher than previously thought, so that oil will last another 40 years,14 30 more than predicted in Fig. 2.16. There was widespread doubt, however, about this result from a normally reliable source. For instance, the IEA (International Energy Agency) assessed the top 400 oil fields and found them old and in bad condition.15 They did not see how the present consumption of 87 million barrels per day can exceed 100 million, much less than the 116 million predicted by 2030. Similarly, the six oil fields that produce 90% of Saudi oil were found to be greatly depleted.16 In the USA, the crunch is already felt as the Alaskan pipeline, built in the 1970s to carry most of our domestic oil and gas, is carrying only one-third as much these days because the wells at Prudhoe Bay are being depleted at the rate of 16% per year. Figure 2.19 shows that discoveries of new oil fields have been declining since 1964.17

Russia exports more oil and gas than any other country. It produces 11.8% of the world’s oil, compared with 9.9% for Saudi Arabia and 12.4% for Iran, United Arab Emirates, Kuwait, and Iraq combined.15 Its state utility, Gazprom, is so powerful that it held the Ukraine and other parts of Europe at its mercy by shutting off gas deliveries through its pipeline. The politics of gas and oil are changing. The former holders of power, ExxonMobil, Chevron, BP, and Royal Dutch Shell are being replaced by the new “Seven Sisters”: Aramco (Saudi Arabia), Gazprom (Russia), CNPC (China), NIOC (Iran), PDVSA (Venezuela), Petrobas (Brazil), and Petronas

(Malaysia).18 The IEA predicts that 90% of new oil and gas discoveries will come from developing nations. We will next show the different ways in which the indus­try is trying to explore beyond “proven” reserves.