Black gold might not be as scarce as we thought. This week oil
prices escalated to a record $139 per barrel, but that may
partly be because the amount of available oil in known reserves
has been significantly underestimated. So says Richard Pike, a
former oil-industry adviser and chief executive of the UK Royal
Society of Chemistry, who blames flawed statistical
calculations. Oil companies produce a bell-shaped probability
distribution for how much each oil reservoir might hold, and
then quote as an indicator of the reservoir's capacity a figure
they are 90 per cent certain they can exceed. When publishing a
result for multiple reservoirs, they simply add up the figures
for each one. And this is where the problem lies. "They should
be combining the bell curves for each reservoir," says Pike.
Adding the numbers for each reservoir ignores statistical
information about the extremes of the distribution, giving a ...