Abstract: Future World Oil Supply and Demand--The Impact on Domestic Exploration
Harrison L. Townes
Current world oil consumption (demand) of about 68 million B/D will increase to over 81 million B/D in 10 years. World oil production capacity(supply), currently 6-8% over current demand, cannot meet this demand without adequate investments to boost capacity, particularly in the Middle East. Because of low oil prices these investments are not being made. In 10 years the Middle East needs to supply over 50% of the world's oil; the Far East will by then surpass North America in demand.
It is very possible that there will soon be a period of time when the supply/demand balance will be, or will perceived to be failing. This may cause rapid rises in crude oil prices until the balance is again achieved. Crude oil prices are actually quite volatile; the steadiness and abnormally low prices in recent years has been due to several factors that probably won't be present in the period when the supply/demand situation is seen to be unbalanced.
Domestic oil exploration is strongly affected by the price of crude oil and domestic producers should soon benefit by rising oil prices. Exploration will be stimulated, and small incremental amounts of new oil should be economically viable.
Oil has been estimated to be only 2% of the total cost of producing all U.S. goods and services--if so, then oil price increase should not create any real problems in the total economic picture. Nevertheless, certain industries and life styles heavily dependent on cheap fuel will have problems, as the days of cheap oil will be gone.
Future undiscovered oil in the Earth could be one trillion barrels or more, equal to the amount now considered as proved reserves. There will soon be more of a challenge to find and produce this oil in sufficient quantity and at a competitive cost with other sources of energy. This challenge should keep us busy.
AAPG Search and Discovery Article #90957©1995 AAPG Mid-Continent Section Meeting, Tulsa, Oklahoma