Peak Oil Explained
Peak oil is a concept that is both obvious and mystery. Those that debated and explained peak oil are some of the most adamant about their positions, whatever they may be.
Peak oil is simply the idea that oil is a non-renewable resource. The more we suck out of the grown, the less there is left over. Eventually, we reach a point where enough oil has been pulled out of the ground that there is less of a rate of return. The peak refers to how many barrels of oil are extracted each day.
Oil production from a field is almost always represented by a bell shaped curve. At the outset, production takes a bit to get online causing production to slowly ramp up. Eventually, a high point of the curve is reached where maximum production. That production, however, begins to tail off and the field as a whole begins to produce less. Once this tailing off occurs, we’ve hit the “peak” for the bell shaped curve.
Given this common sense explanation, what is the big controversy about peak oil? Well, the controversy arises when this application is taken from the one field approach and applied to a country or the entire world. The man who ignited this argument is M. King Hubbert.
Hubbert was a senior geoscientist with Shell Oil. He was a major figure in the field of geoscience and geophysics. Most of his contributions have been overshadowed by his peak oil work.
The United States was the Saudi Arabia of oil in the forties and fifties. We actually exported the stuff if you can believe that given these current days. Regardless, Hubbert did a study and predicted that we would see peak oil production in the early 1970s in the United States. He was nearly laughed out of the profession. Then a funny thing happened. Oil production peaked in the US in the early 1970s. Nobody was laughing anymore.
Hubbert also predicted peak oil for the world. He felt the peak would occur in the early 2000s. Although this did not occur, many are concerned that he was only a few years off. Yes, they believe it is happening now or in the next few years. The problem for every prediction is you can only prove peak oil on any scale AFTER it has happened.
One of the biggest proponents of peak oil is Matthew Simmons. He wrote a book, “Twilight in the Desert”, in which he put forth his conclusions regarding oil production in Saudi Arabia based upon his review of voluminous reports provided at conferences by the engineers and employees of Saudi Aramco, the state oil company for the country. The basic argument is there are really only five large Saudi oil fields and they have peaked in regard to production. The coming years of reduced production will badly impact world supplies, cause shortages and basically things could get very ugly.
This brings us to the “so what” factor of peak oil. So what if we’ve peaked? Well, the problem comes from demand and supply. We are currently using roughly 85 million barrels a day of oil world wide. We currently produce about the same figure worldwide. If we have peaked, production will start to drop. The problem is demand will continue to increase as India, China and Russia continue to ramp up their economies.
It has long been suggested we must get off oil since it is a finite resource. While we are not about to run out of oil, we are facing a looming problem of the cost of oil. If we have peaked in world wide production, the Iraq War is arguably going to seem like a small skirmish in the future. Why? Because the various first world countries are going to be fighting to protect their interest in oil. World War III anyone?