BP chief economist: ‘We will never run out of oil’

This assumption also means the relative price of oil will not necessarily increase over time

A drilling rig arrives in Port Angeles, Washington, last month, ready to be towed to the Arctic (AP)

The chief economist of global oil giant BP has said that it is unlikely we will ever run out of oil.

Spencer Dale, chief economist at BP, made the remark at the Society of Business Economists’ annual conference on Tuesday. “Increases in available oil resources are nothing new. But what has changed in recent years is the growing recognition that concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted,” Mr Dale said.

This assumption also means the relative price of oil will not necessarily increase over time.

Mr Dale cited research finding that if all fossil fuel reserves – including gas and coal – were burned, it would generate 2.8 trillion tonnes of CO2. Three times the emissions compatible with a 2C limit on temperature rise calculated by scientist.

The need to restrict to fossil fuel to protect the environment is only one factor that changed has changed the dynamics of the oil industry in recent years, Mr Dale said. Another is the growth of US shale production, which has reduced America’s dependence on energy imports and adjusted the market dynamics.

US shale production has increased to about 4.5 million barrels per day — about 5 per cent of global production — up from almost nothing in 2010.

“The poster child for these advancements in recent years has been the US shale industry. The use of increasingly sophisticated drilling techniques and huge improvements in cost efficiencies has allowed previously uneconomic resources of oil to be recovered,” Mr Dale said.

Despite this speech, the oil giant foresees global energy demand rising 37 per cent by 2035, with two thirds of that coming from fossil fuels in its latest outlook from this year.

BP will be among a number of oil majors due to finalise plans this Friday to contribute towards a global deal on climate change.

World’s top oil companies Shell, Total and Saudi Aramco will also be involved in United Nations climate talks in Paris in December.

Additional reporting by Reuters