Logistic Curves, Extraction Costs and the Effective Size of Oil Resources

The size of potential fossil fuel resources is an issue of perennial interest and controversy. Fundamentally, there appears to be a conflict in interpretation of available data for both past and future extraction histories. As fossil-fuel prices rose dramatically over the past several years, the question of resources once again became acute. In this paper we concentrate on conventional and non-conventional oil resources and make four main points, with the overarching theme that one can determine an effective oil resource that represents significantly less availability for consumption than usually posited by tallying resources in place. First, looking at oil production data in terms of a logistic curve pattern of cumulative production is useful, as many authors have pointed out, but must be done with the awareness of significant predictive shortcomings. Second, a modest disaggregation of oil production regions and of oil types (conventional and non-conventional) can help give some insight into likely production trajectories for the future. Third, historical precedent shows that the large non-conventional oil resources will likely not be produced quickly enough to compensate for increasingly challenging production of conventional oil; the analysis of this point is at the heart of the current work. The fourth point is that one can include some basic assumptions for extraction costs in the logistic-curve approach and, together with data from the International Energy Agency arrive at estimates of how both marginal and average costs will increase with time. These will be compared with recent historical patterns