From time to time I have heard environmentalists say "Even if we allow drilling in the US, it won't matter. We don't have enough reserves to stop importing oil."

Let us deal quickly with the faulty premise of this argument so I can move on to my main point. Even if our reserves were inadequate to fuel the entire US, they would still allow us to reduce imports, lessening our dependence on foreign oil, perhaps allowing us to import only from more friendly nations, and, in any case, making a foreign oil embargo less of a hardship. This argument is almost a classic example of making the perfect the enemy of the good, refusing to drill at all until we have sufficient reserves to stop all imports.

However, that is not my topic for today. Today I want to discuss the US oil reserves in specific, and the misunderstanding many have of oil reserves in general.

First, let me explain what oil reserves are. Most of the time, when one speaks of oil reserves, he is speaking of "known reserves". Known reserves are oil fields where exploratory drilling has been done and the general amount of oil available can be predicted with reasonable accuracy. Sometimes, rather than known reserves, a speaker will take the known reserves and make a projection of total possible reserves. As with any projection from the known to an unknown, these are highly speculative numbers, and unlikely to bear any relation to reality.

Now that we have defined reserves, let me point out a few features of these numbers. First, reserves are dependent on the technology of the day. Wells which were played out in 1950 can be exploited today using new technologies, and oil which is unreachable today may be easily accessible in the future, so any reserve number is dependent on the technology available at the moment. Second, it may be based on a scientific assay of the field, but it is still an estimate, and wells may prove to have more or less oil than projected. Yes, the estimates are usually pretty accurate, and the people making them are experienced and skilled, but the only way any reserve could be measured with absolute accuracy is to remove and measure every drop of oil, any other method of measurement is an estimate. Third, known reserves are the result of exploratory drilling, the more drilling the more fields that will be found. As a result known reserves rise and fall with the amount of money oil companies spend on exploration.

All of which brings me back to my point, that the known reserves in the US do not show what the environmentalists claim. Our present levels of known reserves may only fuel the US for six months or a year, they may only replace a small percentage of imports, but that means nothing.

Let me explain.

The woes of the oil industry began in the Nixon administration. With the signing of the Smithsonian Accords, effectively taking the US off the gold standard, inflation suddenly became a huge concern for the government. Worried that the rapidly falling dollar would cause economic collapse, Nixon imposed wide ranging price controls. Worse still, from the perspective of the oil industry, Nixon imposed strange price controls on domestic oil production, distinguishing between "old" and "new" wells, favoring the former.* Finally, even when he lifted price controls on the rest of the economy, oil remained controlled. As a result, the oil industry virtually stopped exploring. As "new oil" was priced lower there was little incentive to search for it. So, for the entire decade of the 1970's, until Reagan lifted price controls at long last, the oil industry did very little exploration, and known reserves dwindled.

From the 1980's until the present, a second factor has been keeping the known reserves low. That has been environmentalism. As soon as  price controls went away, opening up the possibility of oil companies again exploiting oil fields in the US, environmental groups began to flex their political muscles and shut down exploratory drilling everywhere. As a result, few new fields were added to the already small known reserves.

So, when environmentalist say that there are not enough reserves, they are quite mistaken. The reserves about which they are talking are the incredibly small number of known fields, a number kept artificially small by 1970's price controls and subsequent environmental controls. Were conditions to change and exploration to become both easy and profitable in the US, those known reserves would doubtless increase, as the oil companies began to explore once more. Instead of the small quantity of reserves about which critics now complain, we would likely have more than enough as new fields were found and exploited.

In short, by keeping exploration from taking place, environmentalists have created the artificially low reserve numbers which they then use to justify blocking any new exploration or drilling.

Which brings me to one other related topic. In addition to allowing them to decry the futility of drilling in the US, the misuse of known reserves allows environmentalists to continually predict "the end of oil." From the 1960's through the present, environmentalists have again and again made the statement "given today's consumption, we have at most 30 years of oil left." Never mind that they have been saying it for over 30 years, they continue to make this claim. A claim which, again, is based on confusing known reserves with the total amount of oil which will ever be available.

Hopefully my earlier talk will make obvious the error. As known reserves are driven by economic concerns, it should be obvious why we only have about 30 years of "reserves". (And why that number always falls between 25 and 30, no matter if the claim is made in 1969, 1989 or today.) If the oil industry as a whole has about 30 years of known reserves, it tends to put a brake on exploration, as there is not much to gain by finding more reserves at that time. As the reserves are exploited and some are depleted, exploration starts again, until the known reserves go back to about 25 to 30 years of reserves. Only confusion about what known reserves actually mean allows environmentalists to make these claims of impending doom.

Now, of course, there is some finite amount of oil in the earth (unless the abiotic oil theories are true, which I doubt), but that amount is nowhere close to being known. Nor does it really matter. At the moment we have quite a bit of oil readily available, and much more we have yet to discover. Should the environmentalists get out of the way prices will doubtless drop quite significantly. At least until we eventually, quite a while in the future, outrace our own technological advances, and reach a point where we can no longer find enough oil which is easily extracted using current technology. At that point oil prices will rise, consumption will drop, and alternatives will be sought by the private sector, spurred by the huge profits that can be made.

But that day is not today. We are nowhere even close to the moment we need to start moving from oil to alternatives. Only environmental restrictions and the weakened, but still powerful OPEC cartel keep us from having cheap, abundant oil today, even with the increased demands from China and India.  Oddly enough, one of the things which gives the environmentalists such clout, and keeps us from opening up oil exploration, is the environmentalists' refusal to differentiate between total oil in the earth and known reserves.

So, by their own intentional confusion, they create arguments that support restricting exploration, keeping known reserves low, which allows environmentalists to argue that we are running out of oil.  No matter what happens, the environmentalists can claim the world is coming to an end. If the oil companies explore, keeping reserves high, the world is going to end from pollution, and if they do not, allowing known reserves to drop, the environmentalist tell us oil is running out, and we are all headed for destruction. In short, whatever happens, the environmentalists find a way to claim we are headed for a bad end.

And that is the problem with the environmental movement. Though they claim it is a science, it is something else entirely. For some it is a substitute for religion, combining a faith in the sanctity of nature with faith in man's inevitable destruction of the same. For others it is a tool, either for their own personal gain, or to push some other political agenda. But whatever their motive, all environmentalists are alike in their willingness to argue using distortions, appeals to faith, even outright lies, all the while calling their opponents irrational, and claiming their deceptive arguments are actually science.

It is a truly depressing that so many, including scientists and others who should know better, have bought into this party line, granting to the irrational appeals of the environmentalists the status of "science".

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* These price controls also strongly favored imported oil, starting our addiction to foreign oil that would lead, later in that decade, to long gas lines, "odd/even days" and all those other things that made the 1970's so miserable. (Well, I can't blame polyester leisure suits, disco or Jimmy Carter on price controls, so not everything that made the 70's miserable.)

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Note: My apologies to Redhead for stealing his thunder and writing another environmental article after I said I would not be doing any more for some time. I really had no intention of doing so, but the topic of oil reserves came up in the comments to Novak's article, and I have long been annoyed at the willful confusion of known reserves and the actual amount of oil that will ever be available. As I could hardly explain and fall within the word limit, I could not resist one short article.

Now, after getting that out of my system, I can say I have no plans to write any more environmental articles until I at least finish the three other articles I have been promising, and failing to deliver, since the end of last week.

UPDATED 03/04/2008

An interesting article giving an alternate , but still rosy, view on oil reserves. I disagree with the author on the ease with which oil reserves can be estimated, as I think he is placing too much confidence in our ability to predict oil reserve size and placement. Given our relative inexperience in both deep sea exploration and antarctic exploration, I think any estimates today are likely to have a huge margin of error.

In addition I think he greatly discounts economic factors in US peak oil. Had price controls not been enacted, and environmentalists not run the nation after they ended, it is quite possible new reserves would be found and we would realize that we have not yet hit peak oil. Instead, by accepting a decline in production, largely due to political factors, as technological/resource driven event, I think he draws the wrong conclusion. We have not necessarily run out of new reserves, we have been prevented, by political forces, from seeking new reserves. We do not know if we hit peak production in the US or not, as we have not been allowed to do the exploration required to determine what oil remains.

Still, even granting his numbers, the picture he paints is far more rosy than anything you will hear from the media today.