Below is a supply and demand projection for crude oil through the year 2020. The assumptions used are from authoritative oil industry sources. The chart on the right shows a very different scenerio than what is being presented by various recognized institutions that have claimed the supply/ demand balance is not approaching a critical level.

On the supply side, Cambridge Research Associates claims a very optimistic assumption that for the next 6 years planned supply increases will come on stream delivering 4.5 million barrels of oil daily. This implies a giant field (one billion barrels of reserves) will be added every 2.7 weeks for the next 5 years, a number well beyond other projections. Our projections use 3.5 million bbls. The US Geological Survey states that "global discoveries of new oil peaked in 1962." The World Research Institute states " the amount found in new fields per year is less than 10 billion barrels and falling." We use 9 billion barrels per year of new discoveries, this would imply that these fields would contribute about 2.05 million barrels of oil per day to the global supply each year.

All oil fields face what is called production declines. This is where less oil comes out every year after a production peak is attained. The giant Prudhoe Bay field is now declining at 11% per year and the giant Mexican field Cantarell is expected to decline by 14% annually starting next year. Globally, production declines are present in approximately 80% of the worlds oilfields. Sadad al-Husseini, PhD. Brown University and ex-production head of Aramco, the world's largest oil company, stated in the New York Times that " the global decline rate is four to five million barrels a year." Our assumptions use a decline of 4.5 million barrels a year, or a 6.9% annual decline rate. Demand for oil changes based on economic activity. Current demand is increasing by 2.5% annually. We have cut this back to only 2% per year and this assumes only modest growth from India and China.

Using supply and demand numbers that appear very reasonable, it appears that currently a global oil squeeze has started with little relief in sight. A severe supply shortfall looks possible within 6 years and could have profound social, political and economic consequences.

Assumptions:		..
Decline Rate:		0.069
Current Global Production (millions bbls/day)*		83.1
Annual New Prod. (mill bbls) in Progress to come Onstream		3.5
Percent of Current Production in Decline		0.8
World Oil Demand Annual Increase		0.02
New Discoveries Per Year - Billions of bbls.		9

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