Marcus Cake

Required reading: Will Peak Oil cause a depression in 2010?

Another interesting perspective on Peak Oil. P90 refers to the way that oil reserves are reported to statutory authorities. Simplistically, P90 means that a reported estimate of oil reserves has a 90% chance of being exceeded. This P90 figure is the basis upon which calculations are made. P50 is another measure and indicates that the estimates figure has a 50% chance of being exceeded. But which one should we use?

Probability theory would suggest that a P50 estimate can exceed a P90 estimate by two or three. According to Richard Pike, a 25 year oil industry veteran, actual output has always been closer to P50. Does that mean we actually have 2-3 times more oil than we thought?

Analysis based upon the more “conservative” P90 estimate may drive up oil prices and may encourage the search for more oil reserves and development of substitutes. The world’s oil reserves are very “opaque” - very few know what we actually have.

The difference between P50 and P90 means that Peak Oil may not be an urgent problem for the next decade. It remains a critical problem for the next few decades and this century. The management of peak oil needs to be actively managed - more transparent and a global approach to how scarce resources are applied.