The Oil bubble is about to pop

In tandem with continuous economic growth over the years we have had a continuous growth in oil consumption as well. This makes sense as oil is our civilizations prime source of energy and it takes vast amounts of energy to fuel modern industrial economies. Over the past 15 years or so world oil consumption has increased on average around 2% per year.

Now, on the surface, a 2% per annum growth in consumption doesn't seem like it would be that significant an amount.However there is one implication of exponential growth in consumption of a resource that most people are quite unaware of, and that is, starting at any point in time, if you have a continuous exponential growth in consumption of a resource you will reach a point in which consumption of that resource has doubled. Now here is the real kicker: for each doubling period, the amount of the resource consumed in that single doubling period is greater than all that resource consumed in history up to the start of the doubling time. So what is the doubling time in oil consumption with a 2% per annum growth pattern? It's easy enough to figure out. You divide the number 70 by the percent increase in consumption per year to get the number of years it would take for consumption to double. So 70/2 = 35. Therefore if we start today in April 2008 and world oil consumption continues to increase at 2% per year, world oil consumption would be twice what it is today by April 2043. Furthermore the amount of oil consumed in that single 35 year period from 2008 to 2043 would be more than all the oil consumed in history from the start of the oil age in the late 1800s to 2008.

If, due to the increasing demand for oil from China and India etc, world oil consumption increased from 2% to 3% per year, the doubling time would shrink to 23.3333 years (70/3).

If you think I've got to be kidding that in one 35 year doubling time we could consume more oil than we have consumed in history in the (approximately) 150 years between the start of the oil age (the first commercial oil wells came on stream in the early 1860s) to the current year 2008, you can easily verify for yourself how it works with a chess board and a few grains of rice. Put one grain of rice on the first square of a chessboard and then double the amount of grains on each succeeding square. Therefore, put 2 grains on the second square, 4 grains on the third square, 8 grains on the 4th square. 16 grains on the fifth square etc.

Now note that in the doubling from say square three to square four we went from 1+2+4 = 7 grains of rice on the chess board to 15 grains of rice on the chessboard as we added 8 grains to square 4. So in that one doubling we had to use more grains of rice than previously existed on the entire chessboard. So for those who assure us there is lots of oil, if only the oil companies and the OPEC countries would stop hoarding to jack up prices and stiff us, just be aware that you, by implication, must believe that there is enough oil available to easily provide the world for the next 35 years with more oil than it has consumed in the last 150 years. If you qualify the idea that there is lots of oil, by saying that there is lots of oil at current consumption rates, then explain how you are going to maintain economic growth and the continuing industrialization of China and the rest of Asia without growing oil supplies, or alternatively explain how world economies are going to be changed to a model that does not require continuous economic growth. Keep in the mind that the news making "big find" recently announced by a Brazilian oil company of a new deep water off-shore field was announced as up to 33 billion barrels. That is roughly the amount of oil, the world uses in slightly over 1 year, and it lies in very deep water and very deep underground, all of which will it make it difficult and very expensive to produce compared to traditional, shore based oil.

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