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The recent and continuing surge in gasoline prices has raised concerns and fears about the future of oil-based energy in the coming years. Are we reaching the end of global petroleum supplies in the face of increasing demand that supply seems unable to keep up with? In fact, oil reserves around the world are plentiful, and can keep growing consumption and industrial uses humming for many decades to come.
During the ten-year period, 1997-2007, global production of oil increased by 12.9 percent. Over this same time frame, global oil consumption rose by 15.8 percent, suggesting that demand is outstripping world oil supply.
But oil actually extracted from the earth must be compared with proven oil reserves that represent the known quantities that remain under the earth’s surface, and serve as the basis for future years’ production.
The table below shows that proven reserves have increased from 1,069.3 billion barrels of extractable oil in 1997 to 1,237.9 billion barrels in 2007, or a 15.8 percent increase. The knowledge of proven reserves available for extraction has increased, in other words, at the same percentage rate over the last ten years as global consumption has gone up. 
In 2007, global oil consumption was 31.13 billion barrels. At this current level of consumption, proven reserves in 2007 are sufficient to supply almost 40 years of annual production. Even if we were to assume that growing demand were to rise to 40 billion barrels a year by 2017 before, perhaps, leveling off, these proven reserves would still be enough to supply over 30 years of oil production.
But there is every reason to believe that further geological exploration and advances in oil extracting technologies will assure that even as existing proven reserves are used up to feed current use they will be at least partly if not completely replenished through new discoveries over the years and decades ahead. This was certainly the case during the last ten years when world consumption and proven reserves increased at the same rate.
(And this completely sets aside the vast global known reserves of other energy-providing resources such as shale oil and coal, for example.)
The current oil “crisis” therefore has not been caused by the world “running out of oil.” What has lagged behind global consumption is world-wide extracting and refining of oil into usable energy-supplying forms. A fundamental reason for the short-fall in production has been a conscious decision by the member governments of the Organization for Petroleum Exporting Countries (OPEC), to limit and in fact reduce global supply to maintain high prices for their "black gold."
But also over the last ten years global refining capability has increased by only 12.8 percent, lagging behind the increase in oil consumption and forcing existing refinery facilities, especially in advanced Western economies, to struggle to keep up with the greater demand. In the United States not one new refinery site has been constructed since the mid-1970s. In Europe/Eurasia, refinery capability over the last ten years had actually decreased by 2 percent. In the European Union refinery capacity has only increased by 3.1 percent over the last decade. Government regulations have been a primary factor behind the lack of refinery expansion.
In addition, many of the governments that own and operate their oil sectors so mismanage and abuse the facilities under their control that output has fallen. Hugo Chavez’s socialist government in Venezuela has “succeeded” in bringing the country’s annual oil production down by one million barrels. In the Russian Federation, as the government has directly and indirectly renationalized much of the oil industry, both drilling equipment and refinery sites have fallen into disrepair; Russian refinery capacity is five percent below what it was ten years ago.
With about 80 percent of all the world’s oil reserves in the hands of state-owned oil companies, the failure of oil production to keep up with oil consumption is another lesson in the unworkability of socialism.
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