An excellent article by reporter Jad Mouawad in today’s New York Times knocks the stuffing out of those warning for the nth time that we’re about to run out of oil. What the doomsayers overlook is that existing fields typically deliver about 35% of their oil to the market. Until recently, the rest had been deemed unrecoverable for economic reasons.
But as technology improves and oil prices go up, what was once deemed unrecoverable becomes, well, recoverable. And that has a big impact on supply. Oil analyst Leonardo Maugeri has estimated that if recovery rates (which hovered around only 10% a few decades ago) were to move from 35% to 40%, that would be akin to adding a new Saudi Arabia to the global crude oil market. Maugeri’s recent essay in Newsweek covers a lot of the same ground.
Mouawad’s piece well demonstrates this dynamic at work in the Kern River oil field in Bakersfield, California. First discovered in 1899, the field has been producing for about a century and is still going strong despite numerous predictions over the years that the field was on its last legs.
I’ve said it before and I’ll say it again: the New York Times does a better job reporting business news, industrial trends, and microeconomic developments than any other newspaper — and perhaps magazine — in the world. Today’s piece is an excellent example of why serious people need to read that newspaper.