The harsh rhetoric being exchanged between the United States and Iran concerning the free transit of oil through the Strait of Hormuz is a factor in the dramatic increase in the price of gasoline in the United States and around the world. Along with the harsh rhetoric leaders around the world are expressing toward Iran and its designs for a nuclear weapon, there are real concerns being expressed concerning the supply of oil necessary to meet the economic needs of both developed and emerging economies.

It has long been held that Saudi Arabia and the other members of OPEC control most of the world’s known oil reserves. However, technological advances in the available methods for extracting oil from non-conventional sources may change the oil reserve formula in dramatic fashion. According to data provided on OPEC’s own website, OPEC member nations control “80% of the world’s proven oil reserves.” This data reflects proven reserves as of 2010.

According to current estimates, more than 80% of the world’s proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 65% of the OPEC total. OPEC Member Countries have made significant additions to their oil reserves in recent years, for example, by adopting best practices in the industry, realizing intensive explorations and enhancing recoveries. As a result, OPEC’s proven oil reserves currently stand at well above 1,190 billion barrels.

The following chart displays where the OPEC oil reserves are located.


However, there are many areas of the World with potential oil reserves that are far greater than the oil reserves controlled by the OPEC nations. The following information provided in a report for, written by Jim Ostroff, pertains to the reserves that are in the United States alone.

Here’s a look at some of the largest untapped reserves.

Oil shales: Oil extracted from shale fields represents the mother lode of untapped reserves, at about 1.5 trillion barrels — or 200 years’ worth of supply at current usage levels. Roughly two-thirds of the U.S.’s oil shale fields in Colorado, Wyoming and Utah are in federally-protected areas and closed to development.

Tar sands: Around 75 billion barrels of oil could come from tar sands, similar to Canadian fields, which now churn out a million barrels a day. The sands are located predominantly in Utah, Alaska, Texas and California, as well as in Alabama and Kentucky on federal and state lands that, by laws and administrative orders, are closed to mineral and petroleum development. The outer continental shelf (OCS): Something in the neighborhood of 90 billion barrels of oil sit beneath the ocean bed 50 to 100 miles off the Atlantic, Pacific and Gulf coasts. Presidential bans and congressional prohibitions have put the tracts off-limits to oil company exploration at least until 2012, although there’s a chance that Congress may lift the moratorium before then.

The Bakken Play: With up to 100 billion barrels of oil, the reserves locked under rocks buried a mile or more beneath Montana and Saskatchewan, Canada, are

more than twice the size of Alaskan’s entire oil cache. New drilling and oil recovery technologies are overcoming production obstacles and petroleum companies are rushing to stake their claims.

The Alaska National Wildlife Refuge: About 10 billion barrels of oil are locked away here, with little possibility that federal lawmakers will open the door. A report published for BBC, provides information on another newly discovered massive oil field just off the coast of Brazil.

Petrobras, Brazil’s national oil company, says it believes the offshore Tupi field has between 5bn and 8bn barrels of recoverable light oil.

A senior minister said Brazilian oil production had the potential to match that of Venezuela and Saudi Arabia.

 Other news from the oil industry indicates that Canada also has massive oil reserves in Alberta. A report by Peter Day for BBC dated January 26, 2006 provides reliable information on Western Canada’s oil sand reserves.

 A recent recalculation has revealed that the amount of oil buried underneath the ground in Northern Alberta was not millions of barrels – but trillions. Alberta’s internationally recognised reserves are now put at 175 billion barrels of crude. Only Saudi Arabia has bigger reserves.

 The reason for providing all of the information on the World’s oil reserves is to prove that the rising prices of oil are not a result of scarcity of the resource. One factor in the price of gasoline may be the limited oil refining capability in the United States. According to Roughneck; “In USA alone, about 144 oil refineries exist.” The oil companies do not always operate their refineries at their maximum capacity, but make production decisions on the basis of demand and profitability.

The following chart from the State of California Energy Almanac provides detailed data for the price of gasoline in California for 2012.


This chart is very eye-opening, as there are many cost that are added together to create the price consumers pay at the pump. The largest category remains the cost of the crude oil that went into the gallon of gasoline consumers put in their automobile. The following chart from the European Environment Agency provides oil company production costs for a barrel of oil from a variety of sources.


Current production costs have not changed significantly from the 2008 costs represented on this chart. Using the data on this chart, it is easy to see why Oil Company profits have sky-rocketed as the open market price of oil surges over $100.00 per barrel. Oil prices at $105 per barrel provide a profit approaching $65 per barrel for conventional oil sources. Every time oil speculators drive up the price of oil futures in response to world political conditions, consumers feel the pain at the oil pump.

It has already been repeated many times; the only way North American consumers are going to be protected from rising fossil fuel prices is to fully develop every possible domestic oil resource. Solar, wind and other alternative energy sources are important, but we will be dependent of fossil fuels for the foreseeable future. Until Americans get to the point that they demand of their politicians that the nation’s domestic fossil fuel resources be fully developed and utilized, the nation will be at the mercy of the World’s oil speculators.