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What Happened to Peak Oil?

What Happened to Peak Oil? thumbnail

I was first introduced to the concept of “peak oil” 15 years ago. It was a simple theory: Oil is a finite resource. At some point in time, the world’s ability to increase oil production would ultimately “peak.” And this peak would be followed by a terminal decline in global output.

The theory has been around for almost a century. But the man who popularized the idea was an American geophysicist named M. King Hubbert.

In 1956 Mr. Hubbert presented a research report to the American Petroleum Institute that predicted oil production in the United States would peak in 1970.

Turns out he was right.

U.S. oil production peaked in 1970 at 9.6 million barrels per day. And production did decline afterwards. But Hubbert didn’t see one thing coming: hydraulic fracking.

Hydraulic fracking and other enhanced oil recovery methods were successfully introduced in the new millennium, allowing U.S. oil production to pull itself out of terminal decline. Today, there is almost as much oil produced in the United States as in 1970.

peak oil 12%2F17

And it’s the same story around the world: Enhanced oil recovery systems have saved many nations from Hubbert’s terminal decline.

Truth is, even though oil is a finite resource, there is a lot of crude that can still be recovered from the ground.

But before you start looking to buy gas-guzzling muscle cars again, consider this: Even though there is still quite a lot of oil that can be potentially extracted, it’s getting more and more expensive to produce.

The more complicated the extraction process, the more expensive. And those costs will simply be passed on to you, the consumer.

It’s ultimately a matter of how much you’re willing to pay for petroleum products. If you live in the United States, you pay about $2.50 for a gallon of gasoline right now. Are you willing to pay $5 a gallon? Gasoline already costs over $5 a gallon in many parts of Canada.

How about $10 per gallon?

$20 per gallon?

$50 per gallon?

Oil is still a finite resource. That hasn’t changed. And as it becomes more expensive to produce, petroleum products like gasoline are ultimately going to follow suit. Oil companies aren’t charities. They’re in business to make money. They’re not going to work for free.

Eventually there will come a time when the majority of the population simply won’t pay. The real “peak” for petroleum products won’t be a result of available resources. The real peak is ultimately the market’s willingness to buy.

And that’s right where the electric vehicle revolution shifts into high gear.

The move to electric vehicles will have little to do with environmental concerns for most people. They won’t be trying to save the planet. Instead, most folks will shift to electric vehicles simply because they’ll be more affordable to operate. It all boils down to cost to the consumer.

The electric motor is set to replace the internal combustion engine the same way the light bulb replaced the oil lamp.

Of course, there will always be a sector of the market that will own gas-powered cars. There will always be car collectors and stubborn holdouts.

But this will represent only a small fraction of the market. The majority of the market will be dominated by electric vehicles.

The world is changing. You can decide whether to sit back and watch it all happen or participate and profit. And if you don’t believe the electric vehicle revolution is real, you can see the numbers for yourself outlined here in this report.

Energy and Capital



23 Comments on "What Happened to Peak Oil?"

  1. onlooker on Thu, 21st Dec 2017 2:21 pm 

    Okay what should we expect next from this source, a pitch to join the bitcoin craze geez

  2. MASTERMIND on Thu, 21st Dec 2017 4:29 pm 

    As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.
    https://imgur.com/a/DVSNt

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    Peak Oil Vindicated by the IEA

  3. Go Speed Racer on Fri, 22nd Dec 2017 2:24 am 

    if ya dont have a subscription, then that
    link is no good.

    maybe just cut and paste the core of the
    article, so us poor ex-middle-class people
    can see it without paying for it?

  4. Antius on Fri, 22nd Dec 2017 5:28 am 

    “What Happened to Peak Oil?”

    Nothing. It happened pretty much when Laherre, Campbell, etc. predicted it would and caused the 2008 Great Recession.

    http://www.artberman.com/the-crude-oil-export-ban-what-me-worry-about-peak-oil/

    A lot of people seemed to expect that something dramatic would happen, like a sudden transition to a road warrior future. The truth is that peak oil was merely the mid-way mark in a progressive depletion paradigm that has been progressing for longer than most people here have been alive. What we should have expected to happen was economic decline and rising inequality – which is pretty much what has happened since 2007.

    In response to the recession, central banks around the world dropped interest rates to zero and pumped huge amounts of cash into bond and equity markets. Much of that was recycled into new energy projects, especially unconventional oil and gas. These things have filled much of the gap left behind by declining conventional oil and have driven up equity prices across the board, giving the illusion of prosperity and economic growth. In reality, living standards for the majority of people have declined, spending power has diminished and this is reflected in weak commodity prices. Unconventional oil and gas production is capital intensive and largely unprofitable and this is going to bite home big time as interest rates start to creep back up.

    The global debt binge was a one-shot wonder, intended to maintain status quo for a little while longer. Arguably, it would have been much more sensible in the long run to maintain a tighter monetary policy and prioritise investments that encourage transition to a more sustainable state. That would have made the final reckoning far less painful, but would have meant facing the music sooner. We are hampered by the fact that those in charge often don’t know what is going on and are interested in short term poll rating rather than the long term wellbeing of the populace.

  5. Davy on Fri, 22nd Dec 2017 5:35 am 

    Peak oil dynamics are alive and well. They never sleep and they increase by the day. They are not “THE” existential threat many of us once thought. Back in 2001 until around 2008 we had a peak oil awareness that took on a life of its own. We imagined too much into oil and the economy. Fast forward to 2018 and now we are again imagining too much in the other direction.

    Oil is foundational for our civilization. Economies are fragile and robust. This incongruous juxtaposition is the result of hyper efficiency together with the high performance of techno complexity. We can do a lot of work because of technology and we can harness many strategies to achieve productivity. Combined this also creates low resilience and sustainability to shocks. Risks have been dispersed throughout a global system which makes it appear we are less vulnerable but what has been achieved is more systematic vulnerability. We can now ship food to any food insecure zone. We can rebuild natural disasters anywhere in the world. We can do this because of our economic system. What happens when the economic system no longer functions?

    We now are delocalized through hyper efficiency and techno complexity. We can no longer rebuild locals without the global. Oil is foundational to the hyper efficiency and techno complexity. Renewables and electric transport will likely never scale up because of the physics of energy storage and affordability issues. The affordability of the transition itself is in question. The affordability of the technologies are in question. The resources needed to make this transition are in question.

    Our global economy is very fragile in the respect of confidence that generated the liquidity that lubricates economic activity that maintains vast monocultures and just in time manufacturing. Consumerism must be maintained to ensure the lubrication of economies of scale. Entropic decay is a very powerful force that we are now currently just capably of overcoming in a macro sense. Yet, we are seeing micro decay everywhere just as we are seeing localized ecological failure that are combining into generalized ecological decline. The same total system decay is occurring economically.

    We have overall growth that is stagnating. You cannot believe the numbers which are rounding errors anyway when one considers the manipulation of the statistics. We are involved in a global economy of bubbles that is a Ponzi arrangement. This is generating huge amount of malinvestment and overcapacity apparent with debt and bad debt. This is entropic decay disguised as economic activity and growth. The summation of malinvestment and the stagnation of the bubble formations themselves is now combining in generalized economy decline. Wealth transfer and the gutting of true productivity that once occurred from young vibrant economies is now ended in mature declining systems of overextension.

    Oil is central to this because oil is foundational. The cheap easy to get oil is in decline. The expensive unconventional kind is abundant. There are plenty of liquids to mix in. Gas has come on strong. Yet, it is the mixing of the fragile economy with peak oil dynamics that is so dangerous. All we need is a significant shock to set off a chain reaction of economic contagions and we will find ourselves unable to afford this expensive oil as we do now. We are going to see the same with the very expensive so called renewable revolution that is now fully funded by fossil fuels.

    Renewables have yet to become significant even in Germany that is still range bound with a premature transition. German who is one of the world’s best alternative energy champion is still using copious amounts of oil and coal. We are just now approaching renewable penetration in some areas where storage costs will begin to make the cost differentials significant between fossil fuel run zones and alternative zones. The very narrow margins of world trade will not allow this transition to fund growth at the levels needed to maintain this renewable energy momentum.

    The global economy is now very unstable to any decline. All of this transitory technological efforts combined with economic bubble activity is very dangerous. It is the global meeting the local that will end all this quickly. We are going to find a point where the systematic power of a global macro arrangement is gone and we are in locals without capacity. What good is dispersed economic capacity in comparative advantage when global shipping, finance, and consumerism does not function properly? We can’t produce products locally anymore in the sense of resilience and sustainability.

    Peak oil dynamics are alive and well and anyone thinking otherwise is in a fantasy of habituation of techno growth that will end with limits and the weakest links. Peak oil dynamics are a weakest link we now discount at our peril.

  6. rockman on Fri, 22nd Dec 2017 6:43 am 

    Davy – True. Nothing has changed with respect to global PO. It will happen someday…if it just did occur. But as you point out the POD has been as robust as ever if not more so. Such questions as this is o different the climate change deniers pointing out record low temps in some city. A confusion between weather and climate just as between PO and the POD.

  7. Antius on Fri, 22nd Dec 2017 6:52 am 

    Well said, Davy. My bet is 2018 for the debt-energy bubble to finally burst. That would be exactly 10 years since the last recession. They seem to occur roughly every decade, typically on a year ending on an 8 or 9.

  8. rockman on Fri, 22nd Dec 2017 7:20 am 

    BTW Hubbert’s curve has been proven very accurate. But one has to understand what his curve represents to understand that. If one bothers to read his original paper and not all the erroneous BS put out by fools you would understand that fact. His curve and prediction was for the oil trends that had been developed in the US. He SPECIFICALLY points out his curve would not include yet to be developed trends. Such as the offshore and shale trends. Not to take anything away from his analysis but those trends he analyzed were fairly mature at the time he did his work.

  9. Hello on Fri, 22nd Dec 2017 7:35 am 

    All this peak nonsense talk, double peak, peak this year, peak next year.

    Taking a step back and looking at this in a timeframe of 1000 years, oil extraction will be a very narrow, peak sometimes around the year 2000.

    All else is noise.

  10. fmr-paultard on Fri, 22nd Dec 2017 7:43 am 

    life exists in the ocean in all strata. There are extreme survival deep in the oceans without sunlight with creatures evolved to have no photon receptors and the source of energy is volcanic energy. but a reasonable and sane people would conclude that the biomass exist somewhere in between the extremes. this idea immediately invokes a balancing act on “this” tard. the idea that one has to develop mechanisms to avoid sinking to the deep end or float on the near surface and become food for predatory birds.

    philosophically, supertards must be cognizant of this fundamental of life. this gives him impetus and boldness in his act to slay eurotard and aswang.

    this is all lazy but a former paultard, i’m prone to shortcuts.

  11. MASTERMIND on Fri, 22nd Dec 2017 7:59 am 

    2017 Oil Discoveries At Lowest Point Since The 1940s

    That echoes the repeated warnings from the IEA, which recently predicted that despite the expected massive growth from U.S. shale over the next decade or so, shale won’t be able to carry the load all on its own.

    Shale “cannot increase indefinitely,” the IEA said in its 2017 World Energy Outlook. The IEA also noted that about 2.5 mb/d of supply is lost each year due to depletion, a gap that must be made up with new projects. And the impact of “near-record lows of new conventional oil projects receiving approval in recent years has yet to be fully seen.”

    https://oilprice.com/Energy/Energy-General/Oil-Discoveries-At-Lowest-Point-Since-The-1940s.html

    As M. King Hubbert (1962) shows, Peak Oil is about discovering less oil, and eventually producing less oil due to lack of discovery.

  12. twocats on Fri, 22nd Dec 2017 8:08 am 

    “Oil companies aren’t charities. They’re in business to make money. They’re not going to work for free.”

    Actually they are charity recipients. They are getting paid to work in an increasingly profitless industry.

    They might end up being the biggest welfare mommas in all human history. a giant sinkhole to rival the easter island heads, the late roman empire, mayan temples, and on and on.

  13. Davy on Fri, 22nd Dec 2017 8:09 am 

    Antius, I concur, all bubbles burst eventually. The energy/finance bubble will be the most destructive man has ever created. The key point is the degree and duration of the bubble’s end. Will it be a rapidly cascading unraveling of civilization or a drawn out long emergency. When will this start and where will the worst occur? Randomness of the irrational plays a big part in this. Accurate predictions are futile but the trend is obvious.

  14. fmr-paultard on Fri, 22nd Dec 2017 8:21 am 

    bubbles can be managed technically because a scenario exists where oil is cheap and plentiful but poor people have to divert resources to essentials. this is what antius said but then he forgot and changed his story.

    i don’t like scenario but i’m just a tard i have no say in the matter.

  15. dave thompson on Fri, 22nd Dec 2017 11:07 am 

    The premise of this article rides on the idea of na-na-na (snark) peak oil. Kind of shallow and only preaching to the people that think humans can just go on and on the same way with no consequences.

  16. Anonymous on Fri, 22nd Dec 2017 11:19 am 

    Hubbert had huge disagreements with those who said his forecasts were too negative. They said he needed to better account for improved technology over time. The problem was really one of two extremes: Hubbert not accounting for technical development (or price) both of which we know drive more oil production. And his critics ignoring geological constraints and thinking oil would just magically be produced based on whatever demand asked for. The answer of course is somewhere in between. Harder to think about it that way. But that is the best way.

    Here is a thoughtful discussion of Hubbert It is not all negative by the way, in some ways is more negative of Hubbert’s early opponents! But it is not all positive either. Is fair.:

    https://typriest.files.wordpress.com/2012/07/hubberts-peak-hsns.pdf

  17. fmr-paultard on Fri, 22nd Dec 2017 12:17 pm 

    just to comment quickly on eurotard on another thread. he said america has fake nukes. this is a reference to the idea that nukes is a jewish construct. i kid you not guys.

    it’s well known that i think the moon landing is fake. eurotard takes a huge leap forward.

  18. Cloggie on Sat, 23rd Dec 2017 3:46 am 

    What Happened to Peak Oil?

    It became obsolete, for two reasons:

    1. https://www.thenation.com/article/third-carbon-age/

    2. http://cinergy.be/wp-content/uploads/solar2-1.png

    Ad 1. Thanks to new technology the world economy all of a sudden has potential access to enormous amounts of fossil fuel that weren’t accessible only a few decades ago. I wouldn’t be surprised if there is enough carbon in the earth crust to tie every single oxygen molecule in the atmosphere, suffocating all life forms. We could dig the dregs up, or rather burn it underground, but we shouldn’t.

    https://deepresource.wordpress.com/2015/04/07/fracking-is-for-amateurs/

    Ad 2. since the sixties we have discovered a new source of endless “fuel”, solar radiation, that per year sends far more free energy to the surface of the earth than all fossil and nuclear fuel burned cumulatively to date.

    Meanwhile in 2017 we have mature technology to convert this radiation (and its wind subsidiary) into energy forms useful for humans. Additional technology required to buffer intermittent supply is under development and approaching maturity as well, so we are probably going to have a hydrogen economy after all:

    https://deepresource.wordpress.com/2017/12/11/high-temperature-electrolysis/

    Hydrogen (or ammonia and methanol derivatives) can do anything that fossil fuel can do. Good riddance to the idea that renewable energy is an extension of fossil fuel. It is NOW, but it won’t be in a few decades.

    There is no fundamental energy problem. Not in a long shot. What is required is patience, long-term thinking and systematically destroying fossil fuel production and consumption via law, carbon-tax and investment in renewable energy.

    By 2100 fossil fuel will be gone completely and nobody will miss it.

    The bottlenecks for humanity are climate, overpopulation and potential disastrous nuclear war.

    Energy is not.

  19. Cloggie on Sat, 23rd Dec 2017 4:02 am 

    just to comment quickly on eurotard on another thread. he said america has fake nukes. this is a reference to the idea that nukes is a jewish construct. i kid you not guys.

    Talking to me sunny? If so, why don’t you quote me properly in said thread? Because I said nothing of the sort.

    it’s well known that i think the moon landing is fake. eurotard takes a huge leap forward.

    I’m not afraid of a good “conspiracy theory” (Pearl Harbor setup, fake-German-war-guilt, holotale, Israel-did-JFK, Israel-did-9/11) but the moonlanding-is-fake is outlandish. You cannot keep more than ten moonlanding astronauts silent for decades. The Russians had every means to observe what the Americans were doing and would have cried foul if they had reason to do so. The race for the moon was a prestige battle between two economic systems and the Soviets had no incentive to do the Americans a favor.

    In reality the moonlanding was a magnificent German engineering enterprise, paid for by the XXL US tax farm.

    http://www.nytimes.com/2007/12/31/us/31huntsville.html

    https://en.wikipedia.org/wiki/Operation_Paperclip

    Today, the poor Americans have run out of Natzis to provide them with undeserved glamour and the chap who until recently “ran” NASA…

    https://en.wikipedia.org/wiki/Charles_Bolden

    …probably didn’t have the skills to even properly close down the NASA operation. You see, third world countries do not have space programs. The demise of NASA goes hand in hand with the demise of European America. Thank you George Soros and your Open Society baloney!

  20. MASTERMIND on Sat, 23rd Dec 2017 5:24 am 

    CLoggie

    UC Davis Study: It Will Take 131 Years to Replace Oil with Alternatives (Malyshkina, 2010)
    http://pubs.acs.org/doi/abs/10.1021/es100730q

    University of Chicago Study: predicts world economy unlikely to stop relying on fossil fuels (Covert, 2016)
    https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117

    see we have actually studied how long transitions would take you uneducated buffoon. LOL Nice chart about solar…How much energy did solar and wind provide last year? 1 percent according to the IEA…LOL How dumb can you possibly be? Solar and Wind are scams….

  21. Davy on Sat, 23rd Dec 2017 6:21 am 

    “It became obsolete, for two reasons:”
    Nope, not obsolete just delayed some from technology and luck.

    Those who are blinded by techno optimism are all over themselves about this process of techno development that continues to this day. This process is suffering diminishing returns but there is still just enough of it to keep these unicorn believers believing. Unicorn believing is typical of techno/economic blindness that humans have always had. We become complacent with life with comfort and security. We become habituated to peaceful settings and techno development. We are told to be optimistic and happy from when we first can understand life. What it is is self-deception. Some people just can’t bear the thought of all this ending. It is much the same when we are told we have a terminal illness. It is the classic case of denial of death. It is the narrative of civilization itself. Even the skydaddy religions talk about immortality. An immortality that is human based not reality based. I don’t know what is ahead with life but going through white gates to see the family doesn’t sounds like it. This same situation is true with the techno optimist and their manifest destiny of the human experience. They can’t bear the thought of civilization turning to dust.

  22. Mark Ziegler on Sat, 23rd Dec 2017 6:53 am 

    Just another biased investor that wants your money.

  23. Cloggie on Sat, 23rd Dec 2017 8:39 am 

    http://www.sciencedirect.com/science/article/pii/S2214629615300827

    At the state or national scale, almost complete transitions to oil and electricity in Kuwait, natural gas in the Netherlands, and nuclear electricity in France took only a decade, roughly, to occur.

    If pressed, Europe can carry out the renewable energy transition before 2030. They don’t do it because they want to write off the old fossil junk first. This attitude could change though.

    https://deepresource.wordpress.com/2017/09/30/hans-josef-fell-accelerating-the-global-transition-to-100-renewable-energy/

    https://deepresource.wordpress.com/2017/03/24/the-netherlands-fossil-free-in-2030/

    https://deepresource.wordpress.com/2017/01/03/netherlands-sustainable-by-2030/

    UC Davis Study: It Will Take 131 Years to Replace Oil with Alternatives (Malyshkina, 2010)

    If all Americans would be depressed, low-IQ morons like you millimind, you would have a point. But they are not so I think that the US will do much better than the peer-reviewed morons from UC Davis predicts.

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