How much oil do we really have?

As oil prices remain volatile the markets do their best to forecast future prices. Unfortunately this is not an easy task. While it may appear extraordinary to outsiders one of the main problems in the oil market is the reliability of basic statistics.

One of the major problems surrounding oil data is in reserves. These are the basins of crude oil that lie underground. They are either held by governments or the 'oil majors' like BP, ExxonMobil or Shell, or a combination of both. Many countries simply do not allow outsiders to audit the size of these fields.

Whilst it is obviously possible to add reserves by new field discoveries it can seem a perplexing situation to market makers. Kuwait for example still claim exactly the same reserve level as they had in 1985 despite pumping millions of barrels every day since then.

Nor are company estimates any better, with Shell forced to make four revisions downwards of its official reserves since 2002, losing around 4.8bn barrels and damaging its share price ...

(2005-07-17 19:24:49 SGT) [Energy] Permalink

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