The Supply Side: Before It's Too Late; The author of 'The Coming Oil Crisis' defends his doomsday warnings, and issues an urgent call to face the facts.

Byline: C. J. Campbell, Campbell is Chairman of the Association for the Study of Peak Oil and Gas, a network of European scientists

Leonardo Maugeri belongs to the camp of classical "flat-earth" economists who believe that markets and technology will always solve the problem of limited resources. But we agree on one thing: we are not about to run out of oil. What I think we face is a decline in supply, which is defined by the record of discovery.

It is hard to track exactly what kind of oil has been found around the world, in what quantities, because of loose definitions and reporting practices. The U.S. Securities and Exchange Commission demands strict reporting for financial purposes: proved reserves means proved-so-far by current wells or firm development plans, saying little about the full size of the discovery. Naturally, the estimates are revised upward as fields are drilled, giving a misleading impression of "reserve growth." While not globally significant, Shell's recent cut in proven reserves that are not yet in production suggests that companies no longer have a cushion of underreported reserves. Evidently reserve growth is now being countered by reserve erosion.

Many countries report unreliable information. Last year 68 countries reported implausible reserves. Some have remained unchanged for years. Maugeri is right that OPEC countries had reasons to increase reported reserves in the late 1980s, but the key point is that the revisions have to be backdated to the discovery of the fields in order to build a sound discovery trend.

This corrected trend line shows that world discovery reached a peak in the mid-1960s, and fell below consumption in 1981. We've been in deficit ever since. In 2002 we found about 7 billion barrels but consumed 25 billion. The decline continues despite the use of new technology in a worldwide search encouraged by tax write-offs for most of the cost of exploration.

It is also true that some areas have been ...