What is “peak oil”

The theory of peak oil is a concept which was brought forward by Dr. Marion King Hubbert which is based upon the observations of single oil fields, which through their lifetime experience increasing returns until there is a peak or highest point of production, after which the quantity of product produced reduces over time, eventually reached a zero point. The Hubbert theory of peak oil is the expansion of this observable phenomenon from a single oil field to the entire world oil production industry. Unlike other resources, oil is non-renewable and thus there is a finite supply of it on the planet, so as the supply increases to shrink and the rate of oil production continues to increase, which has been the current trend for decades, then eventually a peak point in production will be reached. Although the peak point of production would be impossible to identify until well past the point, it is nevertheless a significant marker.

However Hubbert’s theory of peak oil has come under fire, though the critics of the theory focus not the basic mechanisms and premises of the theory but instead how it is used as a model of predicting the future of the oil industry. The fact that many oil-producing countries do not fully disclose the scale of their reserves of their production capacity in earnest and that a history of oil production has shown that new methods of extraction and new geographical sites have thrown predictions for the future producing capacity of the oil industry in the past and there have been many claims that the peak point of production had been reached or was imminent which have latterly proven to be premature. In economic terms, experts in the oil industry have asserted that the supply of oil is to a great extent determined not by the finite nature of the resource but by the price of oil on the world market, as the price increases, sites which were previously not economically viable to exploit become so and thus lead to an increase in the overall world oil supply. Thus although the oil supply will certainly run out at some point in the future, such experts argue that it is near to impossible to predict when due to the unknown nature both of the actual quantity of oil on the planet and the unpredictable nature of future demand.

Society has become to be increasingly dependent on oil, both as a means of producing electricity and also as the fuel which powers our most widespread transport systems such as the bus network and car ownership. Although ‘green’ technologies, which are renewable and produce no carbon, are now available, their cost even with government subsidies, usually far exceeds the like oil-based technology and thus remains unattractive to consumers. Although energy consumption behaviours are changing with more focus on green technologies than in the past, they may not be at the pace required to avert some of the severe consequences of climate change and global warming.

Environmental groups also argue that the new methods of extraction and areas of exploitation of energy sources are liable to be even more detrimental to the environment than previous attempts. The interest in searching the North and South poles for oil, deep sea drilling which runs of the obvious risk of major oil spills into the ocean and even fracking (which has been shown to increase the incidence and intensity of earthquakes), shows the disregard shown to the environment in the pursuit of cheap, affordable energy.

The importance of oil as one of the vital imports which keep an economy functioning has been recognised by politicians and the public alike and typically is one of the most important items on the agenda of politicians when tackling areas such as trade, economic growth and energy security. Many political activists have pointed to the human rights abuses of some of the world’s greatest oil producing countries, arguing that continued diplomatic relations and tolerance of these countries is solely due to their ownership of large oil reserves. Indeed some have gone so far as to highlight the correlation between Western intervention and oil zones, which has left large swathes of Africa, North Korea and members of Latin America under military dictatorships and in some cases in a state of civil war, whilst focusing on the oil rich Middle East.

The lack of progress made on green technology, the growing energy demands of what is becoming an ever increasing and increasingly energy dependent global population and the lack of changes in behaviour in societies who are well versed in the arguments supporting climate change and the future damage it will cause to the planet, has led too many critics predicting dire consequences for an oil-addicted globe when the oil finally runs out. Those of a more optimistic persuasion, argue that phenomena such as fracking, show a clear ability of the world to find new energy sources and develop new technology when pressed. Although whether this trend of ingenuity and resourcefulness will continue to be the case into the future is highly controversial and open to debate.

Recent studies conducted into how oil and more specifically petroleum have affected the global population have begun to broaden their gaze from the obvious areas of more numerous and powerful natural disasters, rising sea levels and harm to species who have to experience man-made alterations to their natural habitats, with the possibility of extinction being the result. One particularly interesting study has focused on the reliance of modern society on petroleum, analysing how urban zones such as suburbs and rural settlements which are in reach of major settlements, would be made untenable unless for the car.

The theory of peak oil and thus been caught up in much wider and extensive debates on climate change, the future of the oil industry and whether humanity faces an energy crisis in the coming decades. One of the fiercest debates occurring though, and which has been alluded to above, is how nations should respond to prospect of declining oil production. Environmental groups argue that the effects of burning oil and gas are so detrimental to the long-term health of the environment that we should consider a major shift in emphasis and focus on renewable energy sources such as wind, solar and tidal power which produce no carbon emissions. However others have pointed to the sheer scale of global demand for energy, stating that the current green technology would be insufficient to meet the growing demand for energy and instead advocate investment in new forms of exploration and exploitation of oil and other hydrocarbon sources of fuel.

The current economic crises which swept across the world in the last few years and which continues to persist in many countries has seen the issue of green energy tumble down the political agenda of governments in all nations. As many governments have to cut down their expenditure in the post financial crisis era, many are targeting expensive environmental safeguards and subsidies and government investment in green technologies as potential areas for cuts, often with the tacit approval of their electorates, who put the economy and their standard living as more important priorities than the environment. The economic importance of oil as one of the key components without which a modern economy can function, highlights society’s dependence on oil and apparent willingness to continue that dependency despite the environmental damage it causes.

The explosion in the demand for oil as demographical enormous countries such as China and India, as well a smaller but still significant nations in Asia, Latin America and Africa, have industrialised as added a huge amount of demand for oil in the global economy. Such nations are reluctant to harm their short and medium term economic futures by pursuing green technology and point to the histories of Western nations who also industrialised and generated an increased demand for oil, as part of the economic process a country must undergo to become a modern and successful economic power.

In conclusion, the peak oil theory appeals to logic and is set upon firm premises, but the application of that theory as a tool for future predictions of oil production is highly contentious. The validity and merit of the criticisms is open to interpretation, but the underlying premises which the peak oil theory operates on, that oil is a non-renewable, finite resource which is being gradually depleted, holds true. There has been speculation of utilising other hydrocarbon sources as the oil supply runs out and this has been perceived as a direct refutation of the peak oil theory. However, one must distinguish between how the peak oil theory has been utilised by some, as a basis for abandoning non-renewable forms of energy and what the theory actually advocates, that oil, not other hydrocarbon sources of energy, will reach a point of peak production and gradual decline. When one can separate the theory from the politics in which it is used, the peak oil theory is a logically sound argument for the eventual depletion of the world oil supplies.