World oil and natural gas consumption vs discoveries: Diverging trends mean trouble

Herbert Stein was an American economist who served in both the Nixon and Ford administrations. He is probably most famous for formulating Stein’s Law, namely, “If something cannot go on forever, it will stop.” This is, of course, an obvious statement. But I think it cannot be stated too often in a global society that believes in infinite economic growth.

I propose to take a subset of that growth to demonstrate Stein’s point. The subset is world oil and natural gas consumption versus discoveries. It turns out that Rystad Energy, a major consulting firm at the heart of the global oil and gas industry, has taken note of the fact that “just 25–30% of the oil consumed each year is currently being offset by new discoveries.”

In a separate piece on both oil and natural gas, the advisory firm notes:

Annual conventional discovered volumes once averaged more than 20 billion barrels of oil equivalent (boe) per year in the early 2010s, but these have fallen to nearly one-third of that, with analysis by Rystad Energy showing global discoveries have averaged slightly over 8 billion boe annually since 2020 despite several standout frontier finds in Namibia, Suriname and Guyana. Despairingly, the yearly average declines further to about 5.5 billion boe between 2023 and September this year [2025].

For the uninitiated “barrels of oil equivalent” means Rystad has converted natural gas discoveries into their equivalent in terms of the energy content of barrels of oil. One barrel of oil contains the energy equivalent of about 6,000 cubic feet of natural gas.

All these numbers mean something only when you compare them to current consumption worldwide. According to the U.S. Energy Information Administration (EIA), for oil in 2024 consumption was 82 million barrels per day or 29.9 billion barrels for the year. (I’m using the EIA’s own definition of oil which is crude oil including lease condensate.) Natural gas consumption for 2023 (the last year for which totals are available) was 144.9 trillion cubic feet or 24.1 billion barrels of oil equivalent.

For the purposes of comparing to Rystad’s numbers, let’s add the oil and natural gas consumption together so we get 54 billion barrels of oil equivalent. Looking below at Rystad’s graph of combined oil and natural gas discoveries worldwide going back to 2015, we can see that discovery is badly lagging consumption. Taking oil and natural gas consumption from 2015, we find that for oil the number was 29.5 billion barrels and for natural gas the number was 20.9 billion barrels of oil equivalent. Adding the two together and we get 50.5 billion barrels of oil equivalent. That’s still far in excess of total combined discoveries of around 22 billion barrels of oil equivalent in 2015.

This other now outdated graph shows that for oil at least, the trend of consumption exceeding discoveries has actually been going on for a long time.

It’s a simple statement of fact that when it comes to oil and natural gas, you can’t produce what you haven’t discovered. There is, of course, a lag between the time oil and natural gas are discovered and the fields containing them are fully exploited. That means production can continue to rise for some time, even decades, before lack of discovery leads to lower production. For oil that day seems nearer than ever. For natural gas it might be a decade or two away. But even that is a very short time to get ready for a world of declining oil and natural gas production.

And still we as a global society are pretending that increased consumption of oil and natural gas can go on, if not forever, at least for a very long time. Herbert Stein would be chastising us if he were still around.