So I did some "armchair research" using my favourite research tool: Google Search.
Here is BP (British Petroleum's) latest -- June 2008 -- research on oil reserves.
The US consumes 20.7 M/barrels per day = 7.6 B/barrels per year
The US oil reserves are 29.4 B barrels
therefore, the US has only 4 year's worth of known supply in the ground
That would be a real worry, except if you put it into the context of the world situation:
The world consumes 85.2 M/barrels per day = 31 B/barrels per year
The world oil reserves are 1.24 T barrels (that is T for "trillion")
therefore, the world has 40 year's worth of known supply in the ground
Since "seeing is believing", here is the relevant picture of reserves from the BP report:
Since world consumption is 31 B barrels/year, there is a full year's supply in the ground in Asia Pacific to feed the whole world, an additional 2 years in North America, another 3-4 years in the groundin South/Central America, another 3-4 years in Africa, and 4-5 years worth in Europe/Eurasia, and a whooping 25 years in the Middle East... around 40+ year's worth of oil supply that are "known reserves". (And the above does not even include the 5 year's supply in the Canadian oil sands. In short, there is plenty of oil for the next 45+ years. So why is the price jumping and everybody is screaming "the end of oil"? Something very fishy is going on!!!
My father likes to tell me that when he was in high school in the 1930s that teachers would tell him that oil would run out in "20 years". I remember teaching kids in social studies classes in the mid 1970s that oil would run out in "20 years". Then I read that "oil companies will only find reserves for about 20 years because it is uneconomic to find more since there is no point of piling up reserves so far in the future.
So is the world running out of oil? Obviously yes! And it has been "running out" for the last 70+ years based on "proven oil reserves".
What about the "Hubbert's peak oil" theory? Well... obviously it is true. There is only a finite amount of oil. But have we hit it? Obviously "yes" for the United States because the "end is in sight" for the US. For the world? Not so clear, especially if you look at this latest BP oil survey there is 40+ year's supply of known reserves!!! (And remember... this is just "known" reserves, more will be found when needed, there is no point in "finding it all" right now because there is no economic value in piling up reserves.) The "peak oil" theory is seductive just like the "Limits to Growth" theory of the early 1970s and Malthusian limits pontificated back in the early 19th century. These theories are seductive but too simplistic.
If the BP report is to be believed -- an why would a major oil company report an "excess" of oil reserves when a shortage would allow them to jack up prices? -- then there is plenty of recoverable oil out there to feed the world's need for another 40+ years. Where's the shortage? Why the skyrocketing oil price? (Is this just like the "end of available land for housing" and "house prices can only go up" bubble in US housing translated into the commodities market for oil? My bet is "yes"!)
So, bottom line: why has the price doubled in the last year? I don't know but it sure stinks like speculation.
Here is what oil analyst, Daniel Yergin, in a New Yorker article has to say about "speculation" and who is doing it:
...there’s also something else at work, which the oil guru Daniel Yergin calls a “shortage psychology.” The price of oil—more than that of many other commodities—isn’t based solely on current supply and demand. It’s also based on people’s expectations about future supply and demand, because those expectations determine whether it makes sense for oil producers to sell their oil now or leave it in the ground and sell it later. Currently, the market is assuming that oil will become scarcer, and that global demand will keep rising, especially in rapidly developing countries like China and India. As a result, producers are asking very high prices to pump their oil. Now, it could be that these assumptions are all wrong—that the supply of oil will not be constricted going forward, that concerns about the Middle East are exaggerated, and that higher prices will lead people to cut back on energy consumption, shrinking demand. In that case, oil would turn out to have been hugely overpriced. But that won’t be because of sinister speculators; it will be because oil producers and oil users collectively misread the future.