Mankind's Stake in Middle East Oil

Abstract

To set the stage for discussing Middle East oil, let us review a few of the more important aspects of the world petroleum picture. The Free World, outside the Iron Curtain, produced and used nearly 16 million B/D of petroleum last year. More than half of it, 57 per cent to be exact, was consumed in the United States. Free Europe used about a third as much as we did, or about a sixth of the total. Big as oil consumption is today, it will soon be much larger. How big, how soon, is difficult to say because no reputable oil economist has ever yet made a long-range forecast of oil demand that was as high as consumption subsequently proved to be. There are a few straws in the wind which can be pointed out, however. Over the past five years demand in the United States has grown at the rate of about 5 per cent a year. In Europe during the same period demand has risen 12 per cent annually. Increases in oil use have been still faster in less developed countries. Last year's oil consumption in the Free World as a whole was double what it was only nine or 10 years ago. Whether such rates of growth continue, accelerate, or even slow down a little, it seems reasonable to expect that sometime between 1965 and 1975 if not sooner the Free World will need twice as much oil as it is using today. Sources of More Oil Where are we going to get it? Last year's oil production came primarily from the United States. Production in the United States, while less than our consumption, came to 48 per cent of the Free World's total. The Middle East supplied 23 per cent and Venezuela 17. Can we count on a continuance of supply in those proportions from those sources? A look at the rates at which the various producing countries are drawing on their oil "bank accounts" may help us answer that question. United States petroleum production last year amounted to 8.1 per cent of our domestic proved reserves, and Venezuelan production was 6.8 per cent of its reserves. But Middle East production was only 1.3 per cent of Middle East reserves. Obviously, the principal Western Hemisphere sources of oil the United States and Venezuela are being drawn on five to seven times as fast as those of the Middle East. The United States, with roughly 20 per cent of the world's reserves, produces nearly 50 per cent of the world's oil output and consumes nearly 60 per cent. Overlooking the possibilities of getting oil from shale or tar sands, the facts suggest that if present trends persist, the Western Hemisphere will run out of oil before the Eastern Hemisphere does. This statement concerns only proved oil reserves. How about the chances of finding more oil?