Peak Oil: A Breakdown
Why is Peak Oil a Cause for Concern?
Let’s assume that peak oil theory is correct. Since even after we peak, there will still be years and years of oil in the ground, why is peaking such a problem?
After the peak, we will have less of the cheap, easy oil on which U.S. culture and our modern economy is based. For example, without cheap gasoline from cheap oil, could we have suburbs? Low-density, spread-out suburban living is based on driving. Remember the summer of 2008, when gas prices were high? If they stayed that high (or higher) all the time, could people afford to drive forty miles each way to work, or twenty miles a day around town doing errands? Expensive gas could result in people abandoning the suburbs, and that’s just one effect. Whether it’s the use of oil to make asphalt or plastics, or the global interdependence of trade that requires goods to be shipped worldwide, our society is built on cheap oil.
Today’s Conventional Reserves, Production, and Consumption
Unless there are cultural or technological changes which reduce consumption, the demand for oil will grow year after year. The world population keeps growing—it’s projected to grow by 1.167 percent in 2009, which doesn’t seem like a lot until you realize that adds around 80 million people. Also, the two most populous nations, China and India, are becoming more affluent, which means more cars, more trucks, more roads…more of everything that drives oil consumption. Their oil consumption is growing much faster than that in the U.S. and Europe, though the current global recession may slow that.
Leaving aside population and rising oil consumption for a moment, if you look at a just a snapshot of estimated oil reserves vs. oil consumption, you get:
- Estimated world conventional oil reserves: 1,300 billion, or 1.3 trillion, barrels
- Current world oil consumption (or usage): around 31 billion barrels a year (based on 2007 data)
So, how much longer will conventional oil reserves last at the current rate of usage? Divide 1,300 billion by 31 billion and you get 41.9. If nothing changes—no major new sources of oil or technological advances, but also no significant growth in oil consumption—there’s around 42 more years of oil left. Of course, it’s never the case that nothing changes—population grows, technology improves—but unless there’s a lot more oil out there, at some point, a peak followed by a decline is reasonable to expect.
Other Evidence of Peak Oil
Oil production from individual wells, fields, and even countries has been seen to peak, then decline. Hubbert predicted in 1956 that U.S. oil production would peak between 1965 and 1970—and it did. Matthew Simmons, the chairman of an oil and energy investment bank as well as a leading consultant on peak oil, has collected data supporting his belief that the peak is right around the corner—if we haven’t hit it already. For example, from 1997 – 2006, oil production in over twenty nations declined, and production at a number of oil fields have shown the sort of peak curves that Hubbert predicted. The U.S.’s largest oil field, Prudhoe Bay in Alaska, peaked in 1989 at 400,000 barrels a day, and has since fallen 73 percent.
Since “world oil” is nothing more than the sum of every nation’s oil—which itself is the sum of all of a nation’s oil fields, which themselves are the sum of their individual wells—then if individual wells, fields, and nations can peak and decline, that is evidence that world oil, too, can peak and decline.
Arguments Against Peak Oil
Part of the problem is that disproving peak oil is like proving a negative—you can’t really prove that oil won’t peak sometime. As Simmons has observed, you can only know the peak when looking backwards in time.
The main arguments “against” peak oil don’t disprove the basic idea of peak oil—that there’s a limit to oil production, and one day we’ll meet it—but dispute the timing and the consequences of the peak. The credible arguments affect the when and the what then, but don’t really get to the whether. The two most credible arguments make the following claims:
- there’s more oil out there than are counted in current reserves
- technological and social changes will reduce oil usage
Before getting to them, let’s tackle an incredible argument—and by “incredible” we don’t mean “amazing,” we mean “not credible.”
Abiotic Oil Theory—Is the Earth a Perpetual Oil Factory?
According to abiotic oil theory, oil is produced by chemical and geological processes deep underground, and NOT from the remains of ancient lifeforms. (The prefix “a” means “not” and “biotic” means “life,” so “abiotic oil” is “oil not from life.”) This theory’s strongest proponents were Russian and Ukrainian geologists in the 1950s and 1960s, though more recently a prominent Cornell University scientist, Thomas Gold, argued in favor of abiotic oil.
There is evidence cited for abiotic oil, but for every argument there is a counterargument. Suffice to say, the majority of geologists do not believe in abiotic oil. More importantly, it just doesn’t matter—at any reasonable rate of oil production, not enough is made, fast enough, to affect the peak oil debate.
Additional Conventional and Unconventional Oil Reserves
First, it’s important to distinguish “conventional” from “unconventional” oil reserves. Conventional oil reserves are reached simply by drilling—drill a hole, pump out the oil. Unconventional oil reserves are ones where the “oil” is extracted from some other material, such as tar sands or oil shale. Unconventional oil requires more energy and resources to extract than conventional oil, but there’s a lot of it—more than there is of conventional oil. Even among conventional oil, not all reserves are created equal. Some are drilled on dry land for around $5 a barrel; others are drilled deep underwater, for around $15 a barrel.
Most people who “doubt” peak oil don’t doubt that easy-to-reach conventional reserves will eventually peak. However, they also say that as (1) the price of oil increases, and (2) technology improves, more expensive conventional reserves will be tapped and unconventional reserves will be exploited as well. The increase in price will make it worthwhile to bring these reserves online. Peak oil critics say that since peak oil theory doesn’t take these additional reserves into account, it misses the mark.
For example, Exxon Mobil and Saudi Aramco, the Saudi Arabian national oil company, both believe that, owing to untapped reserves, the “world is nowhere near running out of oil.” A number of economists and geologists feel that, between improvements in oil extraction and recovery technology, and the fact that it’s premature to say that we’ve thoroughly explored the entire world and found all the oil, an oil peak is far off. (On the other hand, it’s important to note that the rate of discovery of new oil has plunged over the last 40 years, from finding 90 billion new barrels in 1964 to finding only 5 billion new barrels in 2005.)
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