Peak Oil


Climate change makes carbon reduction essential. Peak oil makes it inevitable.
High oil prices around the world are constantly being blamed on a variety of reasons:
  • lack of preparedness from the oil companies e.g. no new refineries, no new oil tankers
  • thirst for oil from the likes of China
  • unstable political conditions in some producing countries
  • speculators
  • peak oil and declining production
Peak oil is when we have reached the half-way point in using up the world’s easy oil reserves. It was first described in 1956 by M. King Hubbert, a petroleum geologist employed by Shell Oil Co. Production of crude oil, like that of many non-renewable resources, follows a bell-shaped curve, where the top of the curve is the halfway point for production.
Hubbert's original peak oil graph, published in 1956
It doesn’t mean the world has run out of oil or that it might in the near future. There could be oil for centuries.

For Hubbert's original paper, go to: Nuclear Energy and the Fossil Fuels

As with every resource in the world, once the point is reached where production goes into decline but demand continues, the price for that commodity rises steeply and that rises forever.

We hear about plenty of oil sands and tar oils being able to supply the world for decades. True, but that will come at a cost. It costs 1 barrel of oil to produce 1.5 barrels from that type of oil.

When will this peak occur?

There are 3 schools of thought as to when this peak will occur or has occurred:
  • some that it happened about 2005,
  • the bulk who think by about 2015, and
  • a few who think it will happen about 2030.
The early peakers are typically oil geologists, oil analysts, many in the energy banking, some oil executives and a few who were oil executives but have recently retired. The late peakers are mainly present-day executives of some large oil companies, some oil geologists still working in the industry and some politicians.

For a summary of comments, look at the following website:

Early peakers have been wrong in the past but have been more often right especially when predicting when the decline of individual fields would begin . They are now being taken very seriuosly by many in the industry, many national governments and those in commerce.

So let’s look at what is known:

  • Discovery of new oil fields peaked in the 1970s. We are now finding 1 new barrel for every 4-6 we use, and no new big fields are being discovered.
  • Any new fields are very hard to get at, and that means it will be very expensive to obtain the oil. Mexico has a new one that is over 6 km deep and under the ocean. A new field in Brazil is over 5 km deep.
  • Production has peaked in most of the oil-producing nations (64 out of 90 have already peaked). Australia’s production of oil peaked in 2000.

    What we know we don't know:

    Oil reserve data is a state secret in most Middle East countries.

    In the late 1980s, the Organization of Petroleum Exporting Countries (OPEC) decided that oil production quotas for each of its member states would be set according to their oil reserves. Immediately every one of the Middle East countries put up their reserves - between 50% and 200% overnight - even though there were no new discoveries.

    However some things are coming to light... Just like the Magic Pudding, all of these countries still have the same reserves 25 years later.

    The penny is dropping

    Former US President George W. Bush said Americans had to be weaned off oil - a statement made just days after Kuwait asked for help as they could no longer produce oil as they once did. As well, Saudi Arabia’s biggest field now has water pumped into it to force up oil. Whenever that happens, it indicates the field is in decline.

    In 2007, OPEC was asked to produce more to make up the shortfall from the rest of the world. They were asked to produce an extra million barrels a day. They agreed but have only been able to produce half that amount. Since then USA has begged for more oil to be produced but nothing has changed.

    What about the oil companies?

    Oil companies are saying one thing but their actions are telling another story.
    • Discovery... Exploration is no longer profitable. Over the past few years, oil companies have spent $8 billion on discovery and developing oil wells, and expect only to get an estimated return of $4 billion. Now no oil search is done without government (i.e. taxpayer) subsidies.
    • Infrastructure... Even with high prices and higher demands, oil companies are not investing in new refineries nor new tankers. Why not when oil prices are so high?
    • Annual production figures... To keep shareholders happy, oil companies annual reports do not just include petroleum figures but now include all forms of petroleum energy from bio fuels, gas and tar sands.

    What can YOU do about it?

    Apart from feeling helpless as you pay more at the petrol bowser, you can do things to prepare for a peak oil future:
    • Reduce the 'food miles' of your diet: start using farmer's markets, growing your own food and eating food that is locally in season.
    • Make fewer trips in your car: establish a car pool, catch public transport or dust off the bike!
    • If you have a diesel vehicle, make and use your own biodiesel from waste oil.
    • Otherwise, consider a hybrid or electric vehicle as your next car.