Worldwide, output from existing fields is falling by as much as 8 percent a year, which means that oil companies must develop up to seven million barrels a day in additional capacity simply to keep current output steady—plus many more millions of barrels to meet the growth in demand of about 1.5 percent a year. And yet, with declining field sizes, rising costs, and political barriers, finding those new barrels is getting harder and harder. Many of the biggest oil companies, including Shell and Mexico's state-owned Pemex, are actually finding less oil each year than they sell.
As more and more existing fields mature, and as global oil demand continues to grow, the deficit will widen substantially. By 2010, according to James Mulva, CEO of ConocoPhillips, nearly 40 percent of the world's daily oil output will have to come from fields that have not been tapped—or even discovered. By 2030 nearly all our oil will come from fields not currently in operation. Mulva, for one, isn't sure enough new oil can be pumped. At a conference in New York last fall, he predicted output would stall at 100 million barrels a day—the same figure Total's chief had projected. "And the reason," Mulva said, "is, where is all that going to come from?"
Whatever the ceiling turns out to be, one prediction seems secure: The era of cheap oil is behind us. If the past is any guide, the world may be in for a rough ride. In the early 1970s, during the Arab oil embargo, U.S. policymakers considered desperate measures to keep oil supplies flowing, even drawing up contingency plans to seize Middle Eastern oil fields.
Washington backed away from military action then, but such tensions are likely to reemerge. Since Saudi Arabia and other members of the Organization of Petroleum Exporting Countries control 75 percent of the world's total oil reserves, their output will peak substantially later than that of other oil regions, giving them even more power over prices and the world economy. A peak or plateau in oil production will also mean that, with rising population, the amount of gasoline, kerosene, and diesel available for each person on the planet may be significantly less than it is today. And if that's bad news for energy-intensive economies, such as the United States, it could be disastrous for the developing world, which relies on petroleum fuels not just for transport but also for cooking, lighting, and irrigation.
Husseini worries that the world has been slow to wake up to the prospect. Fuel-efficient cars and alternatives such as biofuels will compensate for some of the depleted oil supplies, but the bigger challenge may be inducing oil-hungry societies to curb demand. Any meaningful discussion about changes in our energy-intensive lifestyles, says Husseini, "is still off the table." With the inexorable arithmetic of oil depletion, it may not stay off the table much longer.