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During the late 1980s, OPEC countries reported massive increases in their oil reserves without, it seemed, any significant discoveries. Overnight, the United Arab Emirates alone almost tripled its official total, from 32 billion barrels to 98 billion. Kuwait, Iran and Iraq also declared similar rises.
At the time, very little exploration or drilling for new oil was being done. What had taken place, however, was the introduction in 1983 of a new system of production quotas for individual OPEC states which tied the amount they were allowed to produce to the size of their stated reserves. The more oil a country said it had, the more it was allowed to produce - and sell. This gave them a financial incentive to lie.
The trouble is that, to date, the OPEC countries have refused calls for them to open up their reserves to independent auditing and as a result it is impossible to tell whether persistent reports of decline in the OPEC states are true or not.
Oil sands are actually tar, formed from oil that has been degraded by water and air. Getting the oil out requires a huge amount of money and labour. It typically costs around $15 a barrel to produce oil from oil sands, compared to just a few dollars for conventional crude. So, to justify the work, companies will only contemplate it if the price of oil is going to remain high.
Speaking in June at a conference at London's Cass Business School, Dr Mamdouh Salameh, a consultant to the World Bank, argued that the tar sands did not have the potential to replace future shortfalls in conventional oil.
'It takes almost as much energy to mine, process, refine and upgrade the oil extracted from tar sand as the energy contained in the light oil produced. There is a small net energy gain/ he said. 'But it is estimated that processing a barrel of tar sand oil releases five to 10 times more greenhouse gases than a barrel of conventional oil.' Furthermore, processing requires huge amounts of fresh water and natural gas, both already in short supply, exacerbating the already enormous environmental impacts of the process. When the most environmentally damaging industry in the world's solution to its impending demise is a process even more damaging than the one currently wreaking havoc on the world's climate, you know we're in trouble.
The last chance saloon - finding more oil
The only hope left for cheap oil, then, is that there is still a lot of it out there to be found. Once again, however, the signs are not good.
As well as casting doubt on the scale of the world's known oil reserves, the Shell Global Scenarios to 2025 report charts the history of oil discoveries around the world, which can be seen to peak in the mid-1970s before beginning to decline. (According to ExxonMobil the actual date of discovery peak was 1963-64). We are now sliding down the far side of this decline; fewer discoveries were made last year than any year since 1952. By 2040, the Shell figures predict, there will be almost no new oil being discovered.
So, when will oil peak?
In truth, estimates vary. The United States Geological Survey says not for 30 years. The IEA expects it to happen anywhere between 2013 and 2037. The London Energy Institute says 2008.
A report by the US Department of Energy on the military significance of America's own oil reserves last year, said: The disparity between increasing production and declining discoveries can have only one outcome: a practical supply limit will be reached and future supply to meet conventional oil demand will not be available.'
This event, the report said, is now inevitable. It continues: '[A range of experts] expect the peak will occur between 2003 and 2020. What is notable... is that none extend beyond the year 2020, suggesting the world may be facing shortfalls much sooner than expected.'