There is more than twice as much oil in the ground as major producers claim, says a former industry adviser.
Richard Pike, now chief executive of the Royal Society of Chemistry, says although it is widely assumed that the world has reached a point where oil production has peaked and proven reserves have sunk by half, this idea is based on flawed thinking.
Current estimates suggest there are 1200 billion barrels of proven global reserves, but the industry's internal figures suggest this amounts to less than half of what actually exists.
The misconception has helped boost oil prices to an all-time high, prompting calls for oil-producing nations to increase supply to push down costs.
The implications of Pike's analysis will alarm environmentalists who have exploited the concept of peak oil to press the need to find greener alternatives.
"We should not be surprised if oil dominates well into the twenty-second century. It highlights a major error in energy and environmental planning - we are dramatically underestimating the challenge facing us," he said.
Proven oil reserves are likely to be far larger than reported because of the way the capacity of oilfields is estimated and how those estimates are added to form the proven reserves of a company or a country. Companies add the estimated capacity of oil fields in a simple arithmetical manner to get proven oil reserves. This gives a deliberately conservative total deemed suitable for shareholders who do not want proven reserves hyped, Pike said.
However, mathematically, it is more accurate to add the proven oil capacity of individual fields in a probablistic manner based on the bell-shaped statistical curve used to estimate the proven, probable and possible reserves of each field. This way, the final capacity is typically more than twice that of simple, arithmetical addition.