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Oil companies produce a bell-shaped probability distribution for how much each oil reservoir might hold, and then quote as an indicator of the reservoir's capacity a figure they are 90 per cent certain they can exceed. When publishing a result for multiple reservoirs, they simply add up the figures for each one. And this is where the problem lies.
"They should be combining the bell curves for each reservoir," says Pike. Adding the numbers for each reservoir ignores statistical information about the extremes of the distribution, giving a result which underestimates the true total figure for all the reservoirs.
According to published estimates, there are 1200 billion barrels still to be extracted, but Pike says there could in fact be twice as much. "The figures are almost meaningless and just provide a conservative estimate for shareholders."
Originally posted by Long Lance\
breaking news: oil fraudsters hysterical and mathematically inept.
who would have thought. feign ignorance and reap record profits while at it. a complete scam.