Sunday, April 22, 2012

2% of the World’s Oil Reserves, and 20% of the World’s Oil

You’ve heard this quote from the President by now.

“We have 2% of the world’s oil reserves. We use 20% of the world’s oil.”

The first problem is that he’s conflating two things that have nothing to do with each other. He might as well say we have 2% of the world’s apples, but we eat 20% of the world’s oranges. If he did, you’d say, “so?” Which is exactly what you should be saying about his quote now.

Look at it this way (h/t PJ Tatler):

Imagine that those 2% are 2% of global reserves of 100,000. That would be a volume of 2000.

Imagine that the yearly global production is 100. America’s consumption is 20%, so a volume of 20.

In this example, America could go on consuming a volume of 20 since it owns itself a volume of 2000. It could go on consuming 20% of the world oil reserves for another hundred years.

The proportions of the numbers he uses are pretty accurate. In fact, we can go on consuming 20% of the world’s oil reserves for about another hundred years.

But that’s not even the worst problem with his statement. The worst problem is that the 2% number is incredibly misleading (some might be inclined to say “You lie!”).

Here is the truth, straight from the Congressional Research Service. The United States is the most fossil fuel rich country in the entire world. Russia is second, and Saudi Arabia is a distant (!) third.

The CRS report uses BOE (Barrels of oil equivalent) as its unit of measure. This means they count coal and natural gas reserves as their equivalent in oil (more on that later). Here’s the conversion they use:

Coal 1 Short Ton = 3.45 BOE
Natural Gas 1 million cubic feet = 177.2 BOE

 

So, what does the CRS say about our BOE reserves?

It says we have about 1.3 trillion BOE’s. In 2010, the U.S. consumed 6.99 billion barrels of oil. At that rate, we could supply ourselves for 185.98 years.

But wait, Chris, you’re cheating. The President specifically said “oil”, and you threw in natural gas and coal. How much in just oil?

That’s a reasonable question. Sadly, I don’t have a reasonable answer. The “proven” oil reserves for the U.S. is around 20 billion barrels of oil, but that doesn’t include ANWR, oil in the Gulf, or shale. And the CRS report doesn’t break down their total estimates for fossil fuel reserves that way.

However, there’s this number which is quite interesting: 70,837,000,000. What’s that number? That’s the number of estimated barrels of oil available in North America, including only fields where there’s a 50% chance or better of retrieving at least that amount.

Now, here’s the other thing worth pointing out. And this is why the BOE number is significant. First, we use oil for a lot of things, not just gasoline. Most of these other items could easily be powered by coal or natural gas (or shale oil, which can’t easily be refined into gasoline, but can be used to produce diesel fuel and jet fuel, for example).

So, while the question of how much oil we consume per year is a good one, a better one is how much gasoline we consume per year.

So, what’s that number? In 2011, it was 134 billion gallons. A barrel of crude oil can be refined to produce about 19 gallons of gasoline, and 23 gallons of other products. So, our 7 billion barrels of oil produced 162 billion gallons of other petroleum products. The need for these products is increasing, and virtually all of this need can be supplied by our coal, natural gas, and shale oil.

In summary, the U.S. can easily supply all of its fossil fuel energy needs for the foreseeable future. All it takes is the decision by the President and Congress to do so.

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