During the past decade, despite more than 250 billion barrels of oil extracted worldwide, net proved reserves rose in excess of 100 billion barrels. That is, gross additions to reserves have significantly exceeded the extraction of oil the reserves replaced.
Underlying the deterioration of confidence has been a constellation of – in my view – three broad factors which, although already individually known to market participants and policy makers alike well in advance of the turmoil, have reinforced one another in a way  1  The dynamics of liquidity and financial cycles have been conceptually analysed, for instance, by Tobias Adrian and Hyun Song Shin in “Liquidity, Monetary Policy, and Financial Cycles”, Federal Reserve Bank of New York Current Issues in Economics and Finance, volume 14 number 1, February 2008; and in “Liquidity and Leverage”, paper presented at the BIS Annual conference, June 2007.