One hundred years ago today, on May 26, 1908, the first major oil strike in the Middle East occurred when engineers working for British entrepreneur William Knox D'Arcy and led by George B. Reynolds hit a gusher more than 1,100 feet below ground in Masjid-i-Suleiman, Persia (Iran).
Last week, a steep rally pushed the price of oil to a record of more than $135 a barrel. Keeping in step, gasoline prices are up 20 percent over a year ago this Memorial Day weekend.
Where are the major oil deposits in the world?
About 62 percent of the world's oil reserves are in the Middle East, according to the most recent estimate of the Oil & Gas Journal. Reserves are oil deposits that can be tapped with existing technology and in the current economic climate. By that yardstick, the countries richest in oil are Saudi Arabia, Canada, Iran, Iraq and Kuwait.
Is all the U.S. oil tapped?
No. The United States still has about 21-billion barrels of recoverable oil and even more offshore in the Gulf of Mexico and Pacific Ocean. Although the United States ranks No. 11 in oil reserves, it is the third-largest pumper of oil in the world, producing about 2-billion barrels a year.
What about oil reserves, and why aren't we using them?
The United States has the biggest stockpile of emergency oil owned by a government in the world. Called the Strategic Petroleum Reserve, it contains about 700-million barrels that are stored along the Gulf Coast in underground salt caverns.
The reserve is designed to provide rainy-day oil in emergencies. The president has authorized its use to alleviate supply disruptions in the first Gulf War and after Hurricane Katrina.
Until this month, the U.S. government had been beefing up the reserve. But Congress voted to halt the purchases to ease gas prices. Some members of Congress have gone even further, clamoring for a release of oil to push down prices. U.S. Energy Secretary Samuel Bodman has rejected the idea. The emergency stockpile "is meant to deal with the physical interruption of the flow of oil to our country,'' Bodman told a House panel last week. "We don't have that issue today."
Where does Iraq fit into world oil production?
Some say Iraq is the last frontier of oil exploration. Experts think only a fraction of Iraq's oil fields have been exploited, according to the U.S. Energy Information Administration. Its reserves are estimated at 115-billion barrels, but recent studies suggest unexplored areas could double that. Iraq's reserve-to-production ratio is the lowest of major oil producers. Security issues have hampered the development of its energy industry.
What's up with ANWR?
Congress has fought for years over whether to open the Arctic National Wildlife Refuge in northern Alaska to oil companies. Last month, President Bush suggested exploring for oil at home, starting with ANWR, could help solve the gas price problem. But a report out this month says drilling there would only offset oil prices by about a dollar a barrel, and even then, not until about 2025.