November 5, 2008
Making It Up in the Oil Patch
This classic chart, much beloved of Peak Oil enthusiasts, shows that OPEC members added dramatically to their reserve estimates soon after oil prices collapsed in 1985. The reason? The members were scrambling for market share, which was calculated in the cartel by the size of reserves. The conclusion is that reserve estimates are, as a rule, pretty worthless.
The reader should keep that in mind in looking at a lot of the nice charts we've collected here. They're based on bogus data! Ha! Just when we thought all was clear. Actually, they're still useful. You just need to keep yourself alert for some adjustments.
The Simmons and Peak Oil view is that the official agencies (IEA, EIA, oil majors like Exxon) relied far too much on published reports by governments and state oil companies, without submitting any of them to scrutiny. The skeptics seem to be getting vindication from the new IEA report, though it's not clear how the IEA will handle this delicate problem.