Can Oil Production Meet Rising Global Demand?

Speakers (l-r): Neil Brown, Frank Rusco, Tad Patzek, Guy Caruso, Robert Hirsch, and Arthur Berman

Can Oil Production Meet Rising Global Demand?

Thursday, October 7, 2010
10:00 – 11:30 a.m.
SVC 203/202 Capitol Visitor Center

On October 7, 2010, the Environmental and Energy Study Institute (EESI) held a briefing on challenges facing the oil industry to keep pace with rising global demand, and the potential implications for oil prices, national security, and the world economy. Numerous sources project demand for liquid fuels to rise to historically unprecedented levels once the global economy recovers from the recent recession. Global oil production, meanwhile, has leveled off since 2005, real oil prices have roughly doubled, and spare capacity has tightened, according to the International Energy Agency (IEA). Potential constraints on global oil production have raised concerns among industry observers, military leaders, and policymakers. This briefing examined the economic, technical, and political factors that influence the rate at which oil is extracted and processed, and how patterns of global oil production are changing. Speakers included:

  • Neil Brown, Senior Professional Staff Member, Senate Foreign Relations Committee
  • Franklin Rusco, Director of Energy, Government Accountability Office
    Presentation (pdf format)
  • Tad Patzek, Professor and Chair, Department of Petroleum Engineering, University of Texas
    Presentation (pdf format)
  • Guy Caruso, Senior Advisor, Center for Strategic and International Studies; Former Administrator, U.S. Energy Information Administration
    Presentation (pdf format)
  • Robert Hirsch, Senior Advisor, Management Information Services Inc.; Author, DOE-commissioned report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management
    Presentation (pdf format)
  • Arthur Berman, Geological Consultant, Labyrinth Consulting Services
    Presentation (pdf format)

Audio recording of the briefing (mp3)

Highlights from Speaker Presentations

    The challenge facing world oil production is not a problem of how much oil is in the ground (i.e. resources), but rather the rate at which oil can be economically recovered from proven reserves. That rate is constrained by a complex combination of economic, technical, geologic, and geopolitical factors.
  • The International Energy Agency projects that production of conventional oil from currently developed fields will decline by 20-30 million barrels per day by 2020. Meanwhile, global demand is projected to rise from approximately 85 million barrels per day at present to nearly 100 million barrels per day by 2020.
  • To date, growth in estimated world oil reserves has kept up with growth in global consumption. Most of this increase, however, has been from adjustments in the estimates of existing reserves. The rate of discovery of new oil fields has been dropping steadily since the 1960s, and is now well below the rate of global consumption.
  • About one-third of the world’s oil is recoverable; the other two-thirds will be left in the ground. Favorable geology, technology, and exceptional management of some oilfields can produce yields up to 50 or 60 percent, while other fields will perform below the one-third average.
  • The historical trend has been to produce oil from the largest, most accessible, and least costly fields first. More than half of world oil production comes from very large oilfields that were discovered more than 40 years ago. Producing additional oil – by extracting more oil from existing fields or finding and developing new, less accessible oil fields – will be more costly and would likely require higher world oil prices.
  • Options to increase oil production or reduce oil demand are likely to take at least a decade or two to implement on substantial scale.
  • The difficulty and time required to transition away from oil may result in steep increases in oil prices, thus constraining economic growth or causing widespread economic disruption.
  • The share of oil produced by OPEC countries, in particular Mideast OPEC member countries, is projected to increase as those countries hold the largest reserves and largest potential to increase production. OPEC countries, however, are unreliable actors in the world oil market.
  • Renewable energy and efficiency measures in the electricity or heating and cooling sectors do not have a direct impact on the liquid fuels market today. However, reducing energy use in non-fuel sectors will be important in the long term to help free up energy for transportation and other uses.
  • Natural gas may be an important "swing" fuel in the near term, but transitioning the transportation sector to make greater use of natural gas will also take time.


World oil production averaged approximately 84 million barrels per day (mbd) in 2009. (U.S. consumption accounted for approximately 19 mbd of that total; Europe, China, and Japan accounted for roughly 15, 8, and 4 mbd respectively. The U.S. Energy Information Administration projects that world demand for liquid fuel will exceed the equivalent of 100 million barrels of oil per day by 2035. A 2010 report by the Department of Defense’s Joint Forces Command (JFC) examined challenges in meeting fuel demand — not because of diminishing reserves, but due to insufficient investment, access limitations, and other factors.

The IEA indicates the majority of future increases in conventional oil production will likely need to come from a notably short list of countries (Saudi Arabia, Iraq, and a few others) as conventional oil production from other nations levels off or declines. The capacity and limits of production from these countries, however, are not precisely known. The JFC report indicates that enhanced recovery technology and increased production of unconventional liquid fuels, primarily tar sands and biofuels, could help offset declining conventional production, but not at levels sufficient to meet projected global demand.

For more information, contact us at policy [at] or (202) 662-1883.

Please click here to subscribe to our e-mail list for event notices or newsletters.