Peak Oil is You

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Page added on February 12, 2014

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Should we be worried about ‘peak oil’?

Should we be worried about ‘peak oil’? thumbnail

Every now and then, in reading about global warming and other environmental issues, I come across a reference to ‘peak oil’, usually as yet another example of how humans blindly pursue their own short-term interests, scarcely heeding the crisis that is waiting for them ahead. And of course we humans do have a tendency to do just that, some of the time, at least.

Anyway, I marked down ‘peak oil’ as a subject to read about, and after some time at the computer, protected by air-conditioning that is doubtless increasing the heat outside, offer you the results of my reading. First, ‘peak oil’ is as contentious as AGW itself. The phrase itself prompts 55,600,000 hits on Google, and there are a dozen or so variants of the phrase as well. You may not be surprised to learn that there are ‘peak oil deniers’ as well.

What is it, exactly? ‘Peak oil’ is defined as the moment of maximum production from a well or basin, when approximately half the recoverable oil is left, so there can be only a declining productivity. It’s not the same as ‘depletion’, which occurs during a period of falling reserves and supply. The term ‘peak oil’ was invented by Marion King Hubbert, a Shell geoscientist who also worked as an academic at Stanford and Berkeley and as a research scientist for the US Geological Survey. He was a serious and distinguished contributor to the geosciences.

Hubbert argued that the supply of oil was finite (no one much would now disagree), and that US production would peak in 1970, which seemed at the time to have been the case. He also predicted that global oil production would peak in 1995 ‘if present trends continue’. This prediction has been much less easy to verify, if only because the expansion of the oil industry from the 1980s onwards, both geographically and in scale terms, has made it much more difficult to say how much oil there actually is.

Both oil companies and oil-producing countries have become coy about how much of their own information they release publicly, and international agencies that monitor energy and oil have to rely on what countries and companies say. BP’s 2013 Statistical Review of World Energy provides the data for the following diagram, constructed by Willis Eschenbach, and the trends are most interesting.


Very simply, proved American oil reserves, according to this chart, have continued at much the same level for some 35 years, while production has gone onwards and upwards. At about 1988 the reserves would have seemed to have equalled total production to that point, which should have meant declining production. But no. New fields came into production that had not been known about in the past.

How long can this go on? We don’t know. In the AGW domain, the scare has moved from ‘right now’, which was the case ten years ago, to the second half of the century. In the case of peak oil, some estimates now say we may reach peak oil globally in 2035. Others say we have already passed it, or it’s next year. You take your pick. One assessment I read suggested that peak oil was an almost silly concept, because both supply and demand for oil are greatly affected by the world price (and oil is a globally traded commodity with global prices for different grades of oil). What will happen, from this perspective, is that oil will become slowly more expensive, to the point where we change what we are doing in many diverse ways: engines made more and more efficient, we shift to different forms of transportation, we bring in alternative forms of energy, and so on. You can see that these changes have occurred to some degree already.

I came to the conclusion that worrying about peak oil is probably unnecessary. It may be that most of the easily recoverable oil has already been recovered, but when a well is ‘dry’ there is still about 40 per cent left: at the moment no one knows how to get it out cheaply enough for the effort to be worthwhile. The ‘unconventional’ oil held in oil sands, shale and other forms is very much larger in volume again, and while, yes, it is also more expensive to get the oil out from shale and sands, that is a technological matter, and technologies do tend to improve, especially when there is a big money prize awaiting. Oil was once very cheap, and its very cheapness was a basic cause of industrial expansion everywhere. Now it is much more expensive, but then GDP has risen a great deal everywhere, so we can still afford it. It’s unlikely to be cheap again.

And here’s a final thought. Australia still had 3.9 thousand million barrels of oil left in 2011, according to BP, and in 1992 we only had 3.2 thousand million barrels left. So we seem to have followed the global trend, as has ‘oil-rich Brunei’, to our north. Actually, Brunei has much less oil than Australia. But there are only a little more than 400,000 people in Brunei, compared to the 23 million in Australia, so its oil-richness is simply a function of its population. You can find out all sorts of interesting things when you can get your hands on some data!

12 Comments on "Should we be worried about ‘peak oil’?"

  1. Makati1 on Thu, 13th Feb 2014 2:06 am 

    Financing the recovery is going to take down the petroleum civilization long before the last barrel is recovered.

  2. Makati1 on Thu, 13th Feb 2014 2:08 am 

    Meant …”Lack of financing for the production of the oil is going to take down the petroleum civilization long before the last barrel is recovered.”

  3. Davy, Hermann, MO on Thu, 13th Feb 2014 3:09 am 

    A yawn is a reflex of simultaneous inhalation of air and stretching of the eardrums, followed by exhalation of breath. Pandiculation is the act of yawning and stretching simultaneously.[1]
    Yawning in adults occurs most often immediately before and after sleep, during tedious activities and as a result of its contagiousness,[2] and is commonly associated with tiredness, stress, overwork, lack of stimulation and boredom, though studies show it may be linked to the cooling of the brain.[3] In humans, yawning is often triggered by others yawning (e.g., seeing a person yawning, talking to someone on the phone who is yawning) and is a typical example of positive feedback.[4] This “infectious” yawning has also been observed in chimpanzees, dogs, and can occur across species.[5][6] Approximately 20 physiological reasons for yawning have been proposed by scholars, but there is little agreement about its main functions.[2]

  4. PapaSmurf on Thu, 13th Feb 2014 4:01 am 


    I doubt financing will be an issue. For something as strategic as energy, governments will do all sorts of tax breaks and subsidies in order to achieve their goals.

  5. GregT on Thu, 13th Feb 2014 4:04 am 

    “I came to the conclusion that worrying about peak oil is probably unnecessary.”

    Probably? Hmmm, doesn’t sound very conclusive to me.

    Come back and try again, after you do a little bit more research.

  6. deedl on Thu, 13th Feb 2014 7:14 am 

    Tweaking the Data …
    The graphic shows data which probably is not false, but it is shown very biased.

    1.) It only shows the time 1980+, which is after the Peak of US-Production so it is a post peak oil slide. And of course the oil production after the peak does not show the peak.

    2.) Kumulative Production is an integral of production. What this mathematicall does is what engineers call a “low pass” meaning it hides small scale data. By carefully looking at the curve it can be seen that the gain of the curve (which equals production) is shrinking except for the last few years, meaning the seemingly linear curve shows most of the time a sinking production trend.

    3.) The Data itself is cherry picked in a way that it only shows paramters that support a certain point of view. It does not show the number of rigs, the price of oil, the changing decline rates, the changing eroei …

    4.) The conlcusion is simply false. The current US-Datas shows, that an economy, that was once able to supply itself with oil end even export oil may stabilize its production after the peak for a prolonged time on a level below peak. But keep in mind that the US only covers roughly half of its demand with domestic oil. So the data shows, that a long plateau may be achieved after peak production, but this is not enough oil to keep business as usual going.

  7. Beery on Thu, 13th Feb 2014 10:28 am 

    Another idiot on the technology bandwagon. What he’s failed to dig deep enough to find is the fact that growth in technology is driven by cheap oil. Take away the cheap oil and you take away the technology, no matter how big the money prize is for recovering the oil.

  8. Makati1 on Thu, 13th Feb 2014 12:06 pm 

    Papa, the government only has as much money as it can drain out of it’s citizens. In case you have not noticed, the citizens of most countries are becoming very anemic. If there is no money to buy oil products they will not be made/sold. Governments produce nothing of value. They only waste the production of their citizens. Much of what is actually produced these days is not necessary and will disappear overnight. The malls will close because 99% of what is in them is ‘for profit’ junk.

    When the global financial system crashes, and it is only a matter of time, most oil recovery will shut down and never start up again. Ditto for much of the production we enjoy today. Think about that. The total energy system is more than fuels. Much, much more. And if we end with a war…

  9. meld on Thu, 13th Feb 2014 12:20 pm 

    I came upon a term yesterday called diabetes, I eat shit loads of chocolate and crisps and was starting to get worried, but I found multiple sites that said pills will fix me, so I’m not worries about diabetes any more….

    Stop posting articles written by teenagers please.

  10. jmm on Thu, 13th Feb 2014 12:24 pm 

    little balls in space.
    if the jam jar is empty he gets this really does not talk longer.
    hubert only calculates the oil, and that came out.
    and these other products will soon follow that same path.

  11. Northwest Resident on Thu, 13th Feb 2014 4:01 pm 

    I read this article last night and thought about it. It seems to me, that the writer of this article is sincere — as in, he is very sincerely trying to convince himself (and others) that “everything is going to be alright” despite all of the conflicting information that he is picking up that would tend to indicate that things are definitely NOT going to be alright. To me, this article is an example of how many people are deluding themselves or allowing themselves to be deluded into ignoring that rumbling noise in the distance that is the end of this world as we know it coming on fast. We witness the inner workings of this writer’s mind as he struggles to find “facts” which deny and disprove those deep fears that he must intuitively feel but would rather not have to deal with. In the end, this writer appears to succeed in convincing himself that thank god, peak oil isn’t anything to worry about after all. How many thousands or millions of others have gone through the same mental exercise of denial that this writer does? My guess is, a lot.

  12. J-Gav on Thu, 13th Feb 2014 5:05 pm 

    Hey Papa, thanks for the comment without any rancor or ad hominem attacks! I may not agree with your conclusion but that’s what participating in an exchange is all about.

    The reason I disagree is that to suppose the government has an infinitely rich bag of tricks to do whatever they want, financially speaking, is erroneous in my view. What today passes for ‘capital formation’ is no more than multi-layered leveraging based on ‘assets’ which allow for zero real-world price discovery. I don’t see that as a winning formula.

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