SCDigest Editorial Staff

SCDigest Says:

That means average oil prices increased for the seventh year in a row, and perhaps surprisingly, this was the first time this has happened in the 150 year history of the oil industry. What do you say? Click Here to Send Us Your Comments Click Here to See Reader Feedback

SCDigest eagerly awaits each year the annual Statistical Review of World Energy from energy giant BP, which simply provides a wealth of information on the production, consumption, and trends in oil and a variety of other energy sources.

Now in its 58th year, the 2009 report has just been released, based on 2008 data. The headline news: despite soaring oil prices in previous years that should have been spurring exploration, proven oil reserves fell modestly, by 3 billion barrels in 2008, to 1258 billion barrels. That leads to a “reserves-to-production ratio” of about 42 years, a level which has stayed almost constant since the late 1980s.

This data, however, will likely make “peak oil” theorists happy, who will argue that reserves have or will soon max out, leading to inevitable production declines as demand continues to rise, eventually leading to soaring prices.

Still, the tone of the report is, in general, quite optimistic: “Our data confirms that the world has enough proved reserves of oil, natural gas and coal to meet the world’s needs for decades to come,” it says. It should also be noted that the main oil reserves data from BP do not include the potentially huge reserves that are available in the Canadian tar sands.

Overall, “Energy prices followed these economic headlines, making for a year of very different parts,” the report notes. The $140+ price that oil reached in July was a record even on an inflation-adjusted basis, but it then fell by more that 70% by the end of the year. All told, however, average oil prices were up 34% in 2008.

That means average oil prices increased for the seventh year in a row, and perhaps surprisingly, this was the first time this has happened in the 150-year history of the oil industry.

The report also notes some trends that certainly should cause some worry about future oil and energy prices. In 2008, for the first time ever, energy consumption in “non-economically developed countries” surpassed that used by developed economies. China, of course, is leading the way, and accounted for about 75% of total growth in world energy consumption in 2008.

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