Peak Oil

(12/1/2008) - (Note: In addition to being a review, this article is a follow-up to  “Peak Oil – When Will it Run Out?.”  If you have read this article, I highly recommend reading this review.)

Theories regarding peak oil tend to be placed on a scale ranging from pessimistic to cornucopian.  Pessimistic doomsayers believe that oil production has peaked and is beginning a ride down a slippery slope of annual 4-5% (or more) reductions in production.  On the other side of the scale, the optimistic cornucopians believe oil production will rise until 2030 and beyond, followed by a long period of constant production.  

Leonardo Maugeri’s The Age of Oil: The Mythology, History, and Future of the World’s Most Controversial Resource falls on the cornucopian side of the scale, though he makes no attempt to predict how much oil we have left.  “Oil resources are finite; this is irrefutable,” says Maugeri.  “But it is equally true that no one knows just how finite they are.  And trying to assess their order of magnitude is a very complicated puzzle.”  The Age of Oil tells the story of the 20th century’s defining resource and discusses different factors that Maugeri believes need to be taken into account, especially by peak oil pessimists, when analyzing the future of this precious resource.

(11/25/2008) - Misleading or incomplete graphs are popular in all professions – in business, academia, and politics.  The peak oil community is no exception.  Here is a graph found in various incarnations at many peak oil sites:

This graph comes from PostPeakLiving.com. Similar graphs are found here, here, and here.

(11/16/2008) - Ever since the use of oil as a major transportation fuel began in the early twentieth century, we have known that we will some day run out.  This was clear after observing the initial surge of production wells offered and their subsequent deterioration. 

Predicting the demise of oil has been a long-standing American tradition.  Leonardo Maugeri, senior vice president of the Italian oil company Eni, writes in his book “The Age of Oil” that a World War One era senate investigation concluded that oil production in the United States has already peaked and that supplies would be depleted within 25 years.  In 1919, the head of the U.S. Geological Survey predicted the end of American oil production would occur by 1928.

Of course, none of this happened.  These estimates were made before the science of oil exploration has come into its own.  But not all such predicti predictions.  Author Kenneth S. Deffeyes writes that when M. King Hubbert made his 1956 prediction that oil production in the U.S. would peak between 1965 and 1970, many people ridiculed him for it.  Looking back, we know that U.S. production peaked in 1970.

Lucky for us, increases in worldwide production more than compensated for sinking American production.  And when it costs $2 a barrel for a supertanker to move oil anywhere in the world, it doesn't make much of a difference at the pump whether the oil was drilled in Saudi Arabia or Texas. 

Beyond Oil: The View from Hubbert’s Peak is part history, part memoir, and a whole lot of geology. Kenneth S. Deffeyes, a Professor Emeritus at Princeton and former researcher for Shell, tells the story of how the earth turned ancient plants and algae into modern fossil fuels, how we extract these fuels from the ground, and what future energy supplies the depths of the earth have to offer.

Beyond Oil evaluates a host of energy sources – petroleum, natural gas, coal, tar sands, oil shale, uranium, and hydrogen – and evaluates advantages, disadvantages, and practical concerns of each.  Deffeyes is first and foremost a geologist, and approaches the book through this lens. He admits he is not an economist and makes no attempt to predict the future of the economy other than to say that, “Business as usual is not in the cards.”

The Peak

In the book’s first chapters, Deffeyes walks us through the basic methodology behind Hubbert’s peak. Named for its original theorist M. King Hubbert, Hubbert’s model tries to predict future levels of petroleum extraction. After an oil industry, whether it be single country or the entire world market, has had a chance to mature, production tends to fall into a fairly consistent pattern. By dividing the current annual production levels by the cumulative production up to that year, Hubbert’s model predicts how much oil will be extracted in the coming years.

Peak Oil is a simple concept. There is a finite amount of petroleum in the ground and we are extracting this black gold faster than the earth can replenish it (much, much, much faster). Over the past 150 years, the general trend has been to extract more oil from the ground than we did the year before, with notable exceptions during the 1930’s and early 1980’s. At some point, we will no longer be able to extract as much as we did in the previous year. This is the point at which we will have reached Peak Oil.

M. King Hubbert: Patron Saint of Peak Oil M. King Hubbert proposed the theory of peak oil in 1956. Using data from oil wells that had already gone into decline, he predicted that United States oil production would peak between 1965 and 1970. In 1970, the United States produced more oil than it would in any year following. The following decline however, has not been as precipitous as Hubbert initially projected. U.S. oil production in the lower-48 (the region surveyed by Hubbert) totaled 1.55 billion barrels of oil in 2005, 32% higher than his estimate for 1970 predicted. Still, pretty good for a 35 year old prediction.

To understand why Peak Oil is such an important idea, think of all the petroleum products in your life. All plastics, like the inside of your car, your computer case, food storage, soda bottles, and furniture. Cosmetics, if you use them. The gas that runs your car. The jet fuel and diesel that propel international trade. Unless you live on a self-sufficient, organic farm, petroleum products are used to grow your food and/or transport it to where you live. I’m just scratching the surface here. Oil is a key ingredient in our modern world. As worldwide demand continues to grow, we know that at some point, we will begin to have less of this resource available to us.