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.