Peak oil

Peak oil

Overview

Peak oil is the point in time when the maximum rate of global petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 extraction
Extraction of petroleum
The extraction of petroleum is the process by which usable petroleum is extracted and removed from the earth.-Locating the oil field:Geologists use seismic surveys to search for geological structures that may form oil reservoirs...

 is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field of related oil wells. The aggregate
Aggregate data
In statistics, aggregate data describes data combined from several measurements.In economics, aggregate data or data aggregates describes high-level data that is composed of a multitude or combination of other more individual data....

 production rate from an oil field
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...

 over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted.
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Encyclopedia

Peak oil is the point in time when the maximum rate of global petroleum
Petroleum
Petroleum or crude oil is a naturally occurring, flammable liquid consisting of a complex mixture of hydrocarbons of various molecular weights and other liquid organic compounds, that are found in geologic formations beneath the Earth's surface. Petroleum is recovered mostly through oil drilling...

 extraction
Extraction of petroleum
The extraction of petroleum is the process by which usable petroleum is extracted and removed from the earth.-Locating the oil field:Geologists use seismic surveys to search for geological structures that may form oil reservoirs...

 is reached, after which the rate of production enters terminal decline. This concept is based on the observed production rates of individual oil wells, projected reserves and the combined production rate of a field of related oil wells. The aggregate
Aggregate data
In statistics, aggregate data describes data combined from several measurements.In economics, aggregate data or data aggregates describes high-level data that is composed of a multitude or combination of other more individual data....

 production rate from an oil field
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...

 over time usually grows exponentially until the rate peaks and then declines—sometimes rapidly—until the field is depleted. This concept is derived from the Hubbert curve
Hubbert curve
The Hubbert curve is an approximation of the production rate of a resource over time. It is a symmetric logistic distribution curve, often confused with the "normal" gaussian function. It first appeared in "Nuclear Energy and the Fossil Fuels," geophysicist M...

, and has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. Peak oil is often confused with oil depletion
Oil depletion
Oil depletion occurs in the second half of the production curve of an oil well, oil field, or the average of total world oil production. The Hubbert peak theory makes predictions of production rates based on prior discovery rates and anticipated production rates. Hubbert curves predict that the...

; peak oil is the point of maximum production while depletion refers to a period of falling reserves and supply.

M. King Hubbert
M. King Hubbert
Marion King Hubbert was a geoscientist who worked at the Shell research lab in Houston, Texas. He made several important contributions to geology, geophysics, and petroleum geology, most notably the Hubbert curve and Hubbert peak theory , with important political ramifications. He was often...

 created and first used the models behind peak oil in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His logistic model, now called Hubbert peak theory
Hubbert peak theory
The Hubbert peak theory posits that for any given geographical area, from an individual oil-producing region to the planet as a whole, the rate of petroleum production tends to follow a bell-shaped curve...

, and its variants have described with reasonable accuracy the peak and decline of production from oil well
Oil well
An oil well is a general term for any boring through the earth's surface that is designed to find and acquire petroleum oil hydrocarbons. Usually some natural gas is produced along with the oil. A well that is designed to produce mainly or only gas may be termed a gas well.-History:The earliest...

s, fields
Oil field
An oil field is a region with an abundance of oil wells extracting petroleum from below ground. Because the oil reservoirs typically extend over a large area, possibly several hundred kilometres across, full exploitation entails multiple wells scattered across the area...

, regions, and countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical logistic distribution curve (sometimes incorrectly compared to a bell-shaped curve) based on the limits of exploitability and market pressures.

Some observers, such as petroleum industry experts Kenneth S. Deffeyes
Kenneth S. Deffeyes
Kenneth S. Deffeyes is a geologist who worked with M. King Hubbert, the creator of the Hubbert peak theory, at the Shell Oil Company research laboratory in Houston, Texas. Deffeyes holds a B.S. in petroleum geology from the Colorado School of Mines and a Ph.D. in geology from Princeton University,...

 and Matthew Simmons
Matthew Simmons
Matthew Roy Simmons was founder and chairman emeritus of Simmons & Company International, and was a prominent advocate of peak oil. Simmons was motivated by the 1973 energy crisis to create an investment banking firm catering to oil companies. In his previous capacity, he served as energy...

, predict negative global economy
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....

 implications following a post-peak production decline—and oil price increase—due to the high dependence of most modern industrial transport
Transport
Transport or transportation is the movement of people, cattle, animals and goods from one location to another. Modes of transport include air, rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations...

, agricultural
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...

, and industrial
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...

 systems on the low cost and high availability of oil. Predictions vary greatly as to what exactly these negative effects would be.
Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investment
Investment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

s in alternatives
Alternative fuel
Alternative fuels, known as non-conventional or advanced fuels, are any materials or substances that can be used as fuels, other than conventional fuels...

 will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price
Price
-Definition:In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services.In modern economies, prices are generally expressed in units of some form of currency...

 of oil at first escalating and then retreating as other types of fuel
Fuel
Fuel is any material that stores energy that can later be extracted to perform mechanical work in a controlled manner. Most fuels used by humans undergo combustion, a redox reaction in which a combustible substance releases energy after it ignites and reacts with the oxygen in the air...

 and energy sources are used. Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred, that oil production is on the cusp of the peak, or that it will occur shortly. Production of conventional crude oil peaked in 2004 at 74 million barrels per day, and greater records reached since then represent only small increases that are failing to keep pace with demand from growing countries, such as China and India. Throughout the first two quarters of 2008, there were signs that a global recession was being made worse by a series of record oil prices.

Demand for oil




The demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

 side of peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. After reaching a high of 85.6 Moilbbl per day in 2007, world consumption decreased in both 2008 and 2009 by a total of 1.8%, due to rising fuel costs. Despite this lull, world demand for oil is projected to increase 21% over 2007 levels by 2030 (104 Moilbbl/d from 86 Moilbbl), due in large part to increases in demand from the transportation sector. A study published in the journal Energy Policy
Energy policy
Energy policy is the manner in which a given entity has decided to address issues of energy development including energy production, distribution and consumption...

 predicted demand would surpass supply by 2015 (unless constrained by strong recession pressures caused by reduced supply).

Energy demand
World energy resources and consumption
]World energy consumption in 2010: over 5% growthEnergy markets have combined crisis recovery and strong industry dynamism. Energy consumption in the G20 soared by more than 5% in 2010, after the slight decrease of 2009. This strong increase is the result of two converging trends...

 is distributed amongst four broad sectors: transportation, residential
Domestic Energy Consumption
Domestic energy consumption is the amount of energy that is spent on the different appliances used within housing. The amount of energy used per household varies widely depending on the standard of living of the country, climate, and the age and type of residence...

, commercial, and industrial. In terms of oil use, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades. This growth has largely come from new demand for personal-use vehicles powered by internal combustion engine
Internal combustion engine
The internal combustion engine is an engine in which the combustion of a fuel occurs with an oxidizer in a combustion chamber. In an internal combustion engine, the expansion of the high-temperature and high -pressure gases produced by combustion apply direct force to some component of the engine...

s. This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 in 2006, and 55% of oil use worldwide as documented in the Hirsch report
Hirsch report
The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005....

. Transportation is therefore of particular interest to those seeking to mitigate the effects of peak oil.

Although demand growth is highest in the developing world, the United States is the world's largest consumer of petroleum. Between 1995 and 2005, U.S. consumption grew from 17700000 oilbbl/d to 20700000 oilbbl/d, a 3000000 oilbbl/d increase. China, by comparison, increased consumption from 3400000 oilbbl/d to 7000000 oilbbl/d, an increase of 3600000 oilbbl/d, in the same time frame.

As countries develop
Economic development
Economic development generally refers to the sustained, concerted actions of policymakers and communities that promote the standard of living and economic health of a specific area...

, industry and higher living standards drive up energy use, most often of oil. Thriving economies, such as China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...

 and India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...

, are quickly becoming large oil consumers. China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006. In 2008, auto sales in China were expected to grow by as much as 15-20%, resulting in part from economic growth rates of over 10% for five years in a row.

Although swift, continued growth in China is often predicted, others predict China's export-dominated economy will not continue such growth trends due to wage and price inflation and reduced demand from the United States. India's oil imports are expected to more than triple from 2005 levels by 2020, rising to 5 Moilbbl/d.

The International Energy Agency estimated in January 2009 that oil demand fell in 2008 by 0.3%, and that it would fall by 0.6% in 2009. Oil consumption had not fallen for two years in a row since 1982-1983.

The Energy Information Administration
Energy Information Administration
The U.S. Energy Information Administration is the statistical and analytical agency within the U.S. Department of Energy. EIA collects, analyzes, and disseminates independent and impartial energy information to promote sound policymaking, efficient markets, and public understanding of energy and...

 (EIA) estimated that the United States' demand for petroleum-based transportation fuels fell 7.1% in 2008, which is "the steepest one-year decline since at least 1950." The agency stated that gasoline usage in the United States may have peaked in 2007, in part due to increasing interest in and mandates for use of biofuels and energy efficiency.

The EIA now expects global oil demand to increase by about 1600000 oilbbl/d in 2010. Asia
Asia
Asia is the world's largest and most populous continent, located primarily in the eastern and northern hemispheres. It covers 8.7% of the Earth's total surface area and with approximately 3.879 billion people, it hosts 60% of the world's current human population...

n economies, in particular China, will lead the increase. China’s oil demand may rise more than 5% compared with a 3.7% gain in 2009, the CNPC
China National Petroleum Corporation
China National Petroleum Corporation is a state-owned fuel-producing corporation and the largest integrated oil and gas company in the People's Republic of China...

 said.

Population


Another significant factor on petroleum demand has been human population growth
Population growth
Population growth is the change in a population over time, and can be quantified as the change in the number of individuals of any species in a population using "per unit time" for measurement....

. Oil production per capita peaked in 1979. The United States Census Bureau
United States Census Bureau
The United States Census Bureau is the government agency that is responsible for the United States Census. It also gathers other national demographic and economic data...

 predicts that the world population
World population
The world population is the total number of living humans on the planet Earth. As of today, it is estimated to be  billion by the United States Census Bureau...

 in 2030 will be almost double that of 1980. Author Matt Savinar predicts that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly out-paces production. Physicist Albert Bartlett
Albert Bartlett
Albert Allen Bartlett is an emeritus Professor of Physics at the University of Colorado at Boulder, USA. Professor Bartlett has lectured over 1,600 times since September, 1969 on Arithmetic, Population, and Energy...

 argues that the decline of the rate of oil production per capita has gone undiscussed because population control
Population control
Human population control is the practice of artificially altering the rate of growth of a human population.Historically, human population control has been implemented by limiting the population's birth rate, usually by government mandate, and has been undertaken as a response to factors including...

 is considered politically incorrect
Political correctness
Political correctness is a term which denotes language, ideas, policies, and behavior seen as seeking to minimize social and institutional offense in occupational, gender, racial, cultural, sexual orientation, certain other religions, beliefs or ideologies, disability, and age-related contexts,...

 by some.

Oil production per capita has declined from 5.26 oilbbl/ain 1980 to 4.44 oilbbl/a in 1993, but then increased to 4.79 oilbbl/a in 2005. In 2006, the world oil production took a downturn from 84.631 Moilbbl/d although population has continued to increase. This has caused the oil production per capita to drop again to 4.73 oilbbl/a.

One factor that has so far helped ameliorate the effect of population growth on demand is the decline of population growth rate since the 1970s. In 1970, the population grew at 2.1%. By 2007, the growth rate had declined to 1.167%. However, oil production was, until 2005, still outpacing population growth to meet demand. World population grew by 6.2% from 6.07 billion in 2000 to 6.45 billion in 2005, whereas according to BP, global oil production during that same period increased from 74.9 Moilbbl, or by 8.2%. or according to EIA, from 77.762 Moilbbl, or by 8.8%.

Agricultural effects and population limits


Since supplies of oil and gas are essential to modern agriculture techniques, a fall in global oil supplies could cause spiking food prices and unprecedented famine
Famine
A famine is a widespread scarcity of food, caused by several factors including crop failure, overpopulation, or government policies. This phenomenon is usually accompanied or followed by regional malnutrition, starvation, epidemic, and increased mortality. Every continent in the world has...

 in the coming decades.A list of over 20 published articles and books from government and journal sources supporting this thesis have been compiled at Dieoff.org in the section "Food, Land, Water, and Population." Geologist Dale Allen Pfeiffer
Dale Allen Pfeiffer
Dale Allen Pfeiffer is a geologist and writer from Michigan, U.S. who has investigated and written about energy depletion and potential future resource wars. He has also written about class war, sustainability, direct action and the environment. He is also an anarchist activist and a member of the...

 contends that current population levels are unsustainable, and that to achieve a sustainable economy and avert disaster
Disaster
A disaster is a natural or man-made hazard that has come to fruition, resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the environment...

 the United States population would have to be reduced by at least one-third, and world population by two-thirds.

The largest consumer of fossil fuels in modern agriculture is ammonia production
Ammonia production
Because of its many uses, ammonia is one of the most highly-produced inorganic chemicals. There are numerous large-scale ammonia production plants worldwide, producing a total of 131,000,000 metric tons of ammonia in 2010. China produced 32.1% of the worldwide production, followed by India with...

 (for fertilizer) via the Haber process
Haber process
The Haber process, also called the Haber–Bosch process, is the nitrogen fixation reaction of nitrogen gas and hydrogen gas, over an enriched iron or ruthenium catalyst, which is used to industrially produce ammonia....

, which is essential to high-yielding intensive agriculture. The specific fossil fuel input to fertilizer production is primarily natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...

, to provide hydrogen
Hydrogen
Hydrogen is the chemical element with atomic number 1. It is represented by the symbol H. With an average atomic weight of , hydrogen is the lightest and most abundant chemical element, constituting roughly 75% of the Universe's chemical elemental mass. Stars in the main sequence are mainly...

 via steam reforming
Steam reforming
Fossil fuel reforming is a method of producing hydrogen or other useful products from fossil fuels such as natural gas. This is achieved in a processing device called a reformer which reacts steam at high temperature with the fossil fuel. The steam methane reformer is widely used in industry to...

. Given sufficient supplies of renewable electricity
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...

, hydrogen can be generated without fossil fuels using methods such as electrolysis. For example, the Vemork
Vemork
Vemork is the name of a hydroelectric power plant outside Rjukan in Tinn, Norway. The plant was built by Norsk Hydro and opened in 1911, its main purpose being to fix nitrogen for the production of fertilizer. Vemork was later the site of the first plant in the world to mass-produce heavy water...

 hydroelectric plant in Norway used its surplus electricity output to generate renewable ammonia from 1911 to 1971.

Iceland currently generates ammonia using the electrical output from its hydroelectric and geothermal power plants
Renewable energy in Iceland
About 81 percent of total primary energy supply in Iceland is derived from domestically produced renewable energy sources. In 2007, geothermal energy provided about 66 percent of primary energy, the share of hydropower was 15 percent, and fossil fuels 19 percent...

, because Iceland has those resources in abundance while having no domestic hydrocarbon resources, and a high cost for importing natural gas.

Overall supply levels


According to the IEA
IEA
IEA can stand for several different things, such as those listed here:* Institute of Economic Affairs* Institute of International and European Affairs, formerly the Institute of European Affairs* Institute of Ethnology and Anthropology, Moscow...

's Oil Market Report dated 10 November 2011, global oil supply had risen to a record high of 89.3 mb/day by October 2011. Of this, oil supply from OPEC nations represented only 30.01 mb/day (33.6% of the total). ,

Discoveries



To pump oil, it first needs to be discovered. The peak of world oilfield discoveries occurred in 1965 at around 55 Goilbbl(Gb)/year. According to the Association for the Study of Peak Oil and Gas
Association for the Study of Peak Oil and Gas
The Association for the Study of Peak Oil and Gas, or ASPO, is a network of scientists, affiliated with a wide array of global institutions and universities, whose goal is to attempt to determine the date and impact of the peak and decline of the world’s production of oil and gas, due to resource...

 (ASPO), the rate of discovery has been falling steadily since. Less than 10 Gb/yr of oil were discovered each year between 2002-2007. According to a 2010 Reuters article, the annual rate of discovery of new fields has remained remarkably constant at 15-20 Gb/yr.

Reserves


Total possible conventional crude oil reserves
Oil reserves
The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is...

 include all crude oil with 90-95% certainty of being technically possible to produce (from reservoirs through a wellbore using primary, secondary, improved, enhanced, or tertiary methods), all crude with a 50% probability of being produced in the future, and discovered reserves which have a 5-10% possibility of being produced in the future. These are referred to as 1P/Proven (90-95%), 2P/Probable (50%), and 3P/Possible (5-10%). This does not include liquids extracted from mined solids or gasses (oil sands, oil shale
Oil shale
Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen from which liquid hydrocarbons called shale oil can be produced...

s, gas-to-liquid processes
Gas to liquids
Gas to liquids is a refinery process to convert natural gas or other gaseous hydrocarbons into longer-chain hydrocarbons such as gasoline or diesel fuel...

, or coal-to-liquid processes
Coal liquefaction
-Methods:The liquefaction processes are classified as direct conversion to liquids processes and indirect conversion to liquids processeses. Direct processes are carbonization and hydrogenation.-Pyrolysis and carbonization processes:...

).

Many current 2P calculations predict reserves to be between 1150-1350 Gb, but because of misinformation, withheld information, and misleading reserve calculations, it has been reported that 2P reserves are likely nearer to 850-900 Gb. Reserves in effect peaked in 1980, when production first surpassed new discoveries, though creative methods of recalculating reserves have made this difficult to establish exactly.

Current technology is capable of extracting about 40% of the oil from most wells. Some speculate that future technology will make further extraction possible, but this future technology is usually already considered in Proven and Probable (2P) reserve numbers.

In many major producing countries, the majority of reserves claims have not been subject to outside audit or examination. Most of the easy-to-extract oil has been found. Recent price increases have led to oil exploration
Oil exploration
Hydrocarbon exploration is the search by petroleum geologists and geophysicists for hydrocarbon deposits beneath the Earth's surface, such as oil and natural gas...

 in areas where extraction is much more expensive, such as in extremely deep wells, extreme downhole temperatures, and environmentally sensitive areas or where high technology will be required to extract the oil. A lower rate of discoveries per explorations has led to a shortage of drilling rig
Drilling rig
A drilling rig is a machine which creates holes or shafts in the ground. Drilling rigs can be massive structures housing equipment used to drill water wells, oil wells, or natural gas extraction wells, or they can be small enough to be moved manually by one person...

s, increases in steel
Steel
Steel is an alloy that consists mostly of iron and has a carbon content between 0.2% and 2.1% by weight, depending on the grade. Carbon is the most common alloying material for iron, but various other alloying elements are used, such as manganese, chromium, vanadium, and tungsten...

 prices, and overall increases in costs due to complexity.

Concerns over stated reserves



Al-Husseini estimated that 300 Goilbbl of the world's 1200 Goilbbl of proven reserves should be recategorized as speculative resources.
One difficulty in forecasting the date of peak oil is the opacity surrounding the oil reserves classified as 'proven'. Many worrying signs concerning the depletion of proven reserves have emerged in recent years. This was best exemplified by the 2004 scandal surrounding the 'evaporation' of 20% of Shell
Shell Oil Company
Shell Oil Company is the United States-based subsidiary of Royal Dutch Shell, a multinational oil company of Anglo Dutch origins, which is amongst the largest oil companies in the world. Approximately 22,000 Shell employees are based in the U.S. The head office in the U.S. is in Houston, Texas...

's reserves.

For the most part, proven reserves are stated by the oil companies, the producer states and the consumer states. All three have reasons to overstate their proven reserves: oil companies may look to increase their potential worth; producer countries gain a stronger international stature
International relations
International relations is the study of relationships between countries, including the roles of states, inter-governmental organizations , international nongovernmental organizations , non-governmental organizations and multinational corporations...

; and governments of consumer countries may seek a means to foster sentiments of security
Security
Security is the degree of protection against danger, damage, loss, and crime. Security as a form of protection are structures and processes that provide or improve security as a condition. The Institute for Security and Open Methodologies in the OSSTMM 3 defines security as "a form of protection...

 and stability
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

 within their economies
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...

 and among consumers.

Major discrepancies arise from accuracy issues with OPEC
OPEC
OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...

's self-reported numbers. Besides the possibility that these nations have overstated their reserves for political reasons (during periods of no substantial discoveries), over 70 nations also follow a practice of not reducing their reserves to account for yearly production. Analysts have suggested that OPEC member nations have economic incentives to exaggerate their reserves, as the OPEC quota system allows greater output for countries with greater reserves.

Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...

, for example, was reported in the January 2006 issue of Petroleum Intelligence Weekly to have only 48 Goilbbl in reserve, of which only 24 were fully proven. This report was based on the leak of a confidential document from Kuwait and has not been formally denied by the Kuwaiti authorities. This leaked document is from 2001, so the figure includes oil that has been produced since 2001, roughly 5-6 Goilbbl, but excludes revisions or discoveries made since then. Additionally, the reported 1.5 Goilbbl of oil burned off
Kuwaiti oil fires
The Kuwaiti oil fires were caused by Iraqi military forces setting fire to 700 oil wells as part of a scorched earth policy while retreating from Kuwait in 1991 after invading the country but being driven out by Coalition military forces...

 by Iraqi soldiers in the First Persian Gulf War
Gulf War
The Persian Gulf War , commonly referred to as simply the Gulf War, was a war waged by a U.N.-authorized coalition force from 34 nations led by the United States, against Iraq in response to Iraq's invasion and annexation of Kuwait.The war is also known under other names, such as the First Gulf...

 are conspicuously missing from Kuwait's figures.

On the other hand, investigative journalist Greg Palast
Greg Palast
Gregory Allyn Palast is a New York Times-bestselling author and a freelance journalist for the British Broadcasting Corporation as well as the British newspaper The Observer. His work frequently focuses on corporate malfeasance but has also been known to work with labor unions and consumer...

 argues that oil companies have an interest in making oil look more rare than it is, to justify higher prices. This view is contested by ecological journalist Richard Heinberg
Richard Heinberg
Richard Heinberg is an American journalist and educator who has written extensively on energy, economic, and ecological issues, including oil depletion. He is the author of ten books...

. Other analysts argue that oil producing countries understate the extent of their reserves to drive up the price.

In November 2009, a senior official at the IEA alleged that the United States had encouraged the international agency to manipulate depletion rates and future reserve data to maintain lower oil prices. In 2005, the IEA predicted that 2030 production rates would reach 120000000 oilbbl/d, but this number was gradually reduced to 105000000 oilbbl/d. The IEA official alleged industry insiders agree that even 90 to 95000000 oilbbl/d might be impossible to achieve. Although many outsiders had questioned the IEA numbers in the past, this was the first time an insider had raised the same concerns. A 2008 analysis of IEA predictions questioned several underlying assumptions and claimed that a 2030 production level of 75000000 oilbbl/d (comprising 55000000 barrels (8,744,301,225 l) of crude oil and 20000000 barrels (3,179,745,900 l) of both non-conventional oil and natural gas liquids) was more realistic than the IEA numbers.

The EUR reported by the 2000 USGS survey of 2300 Goilbbl has been criticized for assuming a discovery trend over the next twenty years that would reverse the observed trend of the past 40 years. Their 95% confidence EUR of 2300 Goilbbl assumed that discovery levels would stay steady, despite the fact that discovery levels have been falling steadily since the 1960s. That trend of falling discoveries has continued in the ten years since the USGS made their assumption. The 2000 USGS is also criticized for introducing other methodological errors, as well as assuming 2030 production rates inconsistent with projected reserves.

Unconventional sources




Unconventional sources, such as heavy crude oil, oil sands, and oil shale are not counted as part of oil reserves. However, with rule changes by the SEC, oil companies can now book them as proven reserves after opening a strip mine or thermal facility for extraction
Resource extraction
The related terms natural resource extraction both refer to the practice of locating, acquiring and selling natural resources....

. These unconventional sources are more labor and resource intensive to produce, however, requiring extra energy to refine, resulting in higher production costs and up to three times more greenhouse gas
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...

 emissions per barrel (or barrel equivalent) on a "well to tank" basis or 10 to 45% more on a "well to wheels" basis, which includes the carbon emitted from combustion of the final product.

While the energy used, resources needed, and environmental effects of extracting unconventional sources has traditionally been prohibitively high, the three major unconventional oil sources being considered for large scale production are the extra heavy oil in the Orinoco Belt
Orinoco Belt
The Orinoco Belt is a territory which occupies the southern strip of the eastern Orinoco River Basin in Venezuela. Its local Spanish name is Faja Petrolífera del Orinoco ....

 of Venezuela
Venezuela
Venezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...

, the Athabasca Oil Sands
Athabasca Oil Sands
The Athabasca oil sands are large deposits of bitumen, or extremely heavy crude oil, located in northeastern Alberta, Canada - roughly centred on the boomtown of Fort McMurray...

 in the Western Canadian Sedimentary Basin
Western Canadian Sedimentary Basin
The Western Canadian Sedimentary Basin is a vast sedimentary basin underlying of Western Canada including southwestern Manitoba, southern Saskatchewan, Alberta, northeastern British Columbia and the southwest corner of the Northwest Territories. It consists of a massive wedge of sedimentary rock...

, and the oil shales of the Green River Formation
Green River Formation
The Green River Formation is an Eocene geologic formation that records the sedimentation in a group of intermountain lakes. The sediments are deposited in very fine layers, a dark layer during the growing season and a light-hue inorganic layer in winter. Each pair of layers is called a varve and...

 in Colorado
Colorado
Colorado is a U.S. state that encompasses much of the Rocky Mountains as well as the northeastern portion of the Colorado Plateau and the western edge of the Great Plains...

, Utah
Utah
Utah is a state in the Western United States. It was the 45th state to join the Union, on January 4, 1896. Approximately 80% of Utah's 2,763,885 people live along the Wasatch Front, centering on Salt Lake City. This leaves vast expanses of the state nearly uninhabited, making the population the...

, and Wyoming
Wyoming
Wyoming is a state in the mountain region of the Western United States. The western two thirds of the state is covered mostly with the mountain ranges and rangelands in the foothills of the Eastern Rocky Mountains, while the eastern third of the state is high elevation prairie known as the High...

 in the United States. Energy companies such as Syncrude
Syncrude
Syncrude Canada Ltd. is the world's largest producer of synthetic crude oil from oil sands and the largest single source producer in Canada. It is located just outside Fort McMurray in the Athabasca Oil Sands, and has a nameplate capacity of of oil, equivalent to about 13% of Canada's consumption...

 and Suncor have been extracting bitumen for decades but production has increased greatly in recent years with the development of Steam Assisted Gravity Drainage
Steam assisted gravity drainage
Steam Assisted Gravity Drainage is an enhanced oil recovery technology for producing heavy crude oil and bitumen. It is an advanced form of steam stimulation in which a pair of horizontal wells are drilled into the oil reservoir, one a few metres above the other...

 and other extraction technologies.

Chuck Masters of the USGS estimates that, "Taken together, these resource occurrences, in the Western Hemisphere
Western Hemisphere
The Western Hemisphere or western hemisphere is mainly used as a geographical term for the half of the Earth that lies west of the Prime Meridian and east of the Antimeridian , the other half being called the Eastern Hemisphere.In this sense, the western hemisphere consists of the western portions...

, are approximately equal to the Identified Reserves of conventional crude oil accredited to the Middle East." Authorities familiar with the resources believe that the world's ultimate reserves of unconventional oil are several times as large as those of conventional oil and will be highly profitable for companies as a result of higher prices in the 21st century. In October 2009, the USGS updated the Orinoco tar sands (Venezuela) recoverable "mean value" to 513 Goilbbl, with a 90% chance of being within the range of 380-652 Goilbbl, making this area "one of the world's largest recoverable oil accumulations".

Despite the large quantities of oil available in non-conventional sources, Matthew Simmons argues that limitations on production prevent them from becoming an effective substitute for conventional crude oil. Simmons states that "these are high energy intensity projects that can never reach high volumes" to offset significant losses from other sources. Another study claims that even under highly optimistic assumptions, "Canada's oil sands will not prevent peak oil," although production could reach 5000000 oilbbl/d by 2030 in a "crash program" development effort.

Moreover, oil extracted from these sources typically contains contaminants such as sulfur
Sulfur
Sulfur or sulphur is the chemical element with atomic number 16. In the periodic table it is represented by the symbol S. It is an abundant, multivalent non-metal. Under normal conditions, sulfur atoms form cyclic octatomic molecules with chemical formula S8. Elemental sulfur is a bright yellow...

 and heavy metals
Heavy metals
A heavy metal is a member of a loosely-defined subset of elements that exhibit metallic properties. It mainly includes the transition metals, some metalloids, lanthanides, and actinides. Many different definitions have been proposed—some based on density, some on atomic number or atomic weight,...

 that are energy-intensive to extract and can leave tailings
Tailings
Tailings, also called mine dumps, slimes, tails, leach residue, or slickens, are the materials left over after the process of separating the valuable fraction from the uneconomic fraction of an ore...

 - ponds containing hydrocarbon sludge - in some cases. The same applies to much of the Middle East
Middle East
The Middle East is a region that encompasses Western Asia and Northern Africa. It is often used as a synonym for Near East, in opposition to Far East...

's undeveloped conventional oil reserves, much of which is heavy, viscous, and contaminated with sulfur and metals to the point of being unusable. However, recent high oil prices make these sources more financially appealing. A study by Wood Mackenzie suggests that within 15 years all the world’s extra oil supply will likely come from unconventional sources.

Synthetic sources


A 2003 article in Discover magazine
Discover (magazine)
Discover is an American science magazine that publishes articles about science for a general audience. The monthly magazine was launched in October 1980 by Time Inc. It was sold to Family Media, the owners of Health, in 1987. Walt Disney Company bought the magazine when Family Media went out of...

 claimed that thermal depolymerization
Thermal depolymerization
Thermal depolymerization is a depolymerization process using hydrous pyrolysis for the reduction of complex organic materials into light crude oil. It mimics the natural geological processes thought to be involved in the production of fossil fuels...

 could be used to manufacture oil indefinitely, out of garbage, sewage, and agricultural waste. The article claimed that the cost of the process was $15 per barrel. A follow-up article in 2006 stated that the cost was actually $80 per barrel, because the feedstock that had previously been considered as hazardous waste now had market value.

A 2007 news bulletin published by Los Alamos Laboratory proposed that hydrogen
Hydrogen economy
The hydrogen economy is a proposed system of delivering energy using hydrogen. The term hydrogen economy was coined by John Bockris during a talk he gave in 1970 at General Motors Technical Center....

 (possibly produced using hot fluid from nuclear reactors to split water
Electrolysis
In chemistry and manufacturing, electrolysis is a method of using a direct electric current to drive an otherwise non-spontaneous chemical reaction...

 into hydrogen and oxygen) in combination with sequestered  could be used to produce methanol
Methanol
Methanol, also known as methyl alcohol, wood alcohol, wood naphtha or wood spirits, is a chemical with the formula CH3OH . It is the simplest alcohol, and is a light, volatile, colorless, flammable liquid with a distinctive odor very similar to, but slightly sweeter than, ethanol...

, which could then be converted into gasoline. The press release stated that in order for such a process to be economically feasible, gasoline prices would need to be above $4.60 "at the pump" in U.S. markets. Capital and operational costs were uncertain mostly because the costs associated with sequestering are unknown.

Production




The point in time when peak global oil production occurs defines peak oil. This is because production capacity is the main limitation of supply. Therefore, when production decreases, it becomes the main bottleneck to the petroleum supply/demand
Supply and demand
Supply and demand is an economic model of price determination in a market. It concludes that in a competitive market, the unit price for a particular good will vary until it settles at a point where the quantity demanded by consumers will equal the quantity supplied by producers , resulting in an...

 equation.

World wide oil discoveries have been less than annual production since 1980. According to several sources, worldwide production is past or near its maximum. World population has grown faster than oil production. Because of this, oil production per capita
Per capita
Per capita is a Latin prepositional phrase: per and capita . The phrase thus means "by heads" or "for each head", i.e. per individual or per person...

peaked in 1979 (preceded by a plateau during the period of 1973-1979).

The increasing investment in harder-to-reach oil is a sign of oil companies' belief in the end of easy oil. Additionally, while it is widely believed that increased oil prices spur an increase in production, an increasing number of oil industry insiders are now coming to believe that even with higher prices, oil production is unlikely to increase significantly beyond its current level. Among the reasons cited are both geological factors as well as "above ground" factors that are likely to see oil production plateau near its current level.

Recent work points to the difficulty of increasing production even with vastly increased investment in exploration and production, at least in mature petroleum regions. A 2008 Journal of Energy Security analysis of the energy return on drilling effort in the United States points to an extremely limited potential to increase production of both gas and (especially) oil. By looking at the historical response of production to variation in drilling effort, this analysis showed very little increase of production attributable to increased drilling. This was due to a tight quantitative relationship of diminishing returns with increasing drilling effort: as drilling effort increased, the energy obtained per active drill rig was reduced according to a severely diminishing power law
Power law
A power law is a special kind of mathematical relationship between two quantities. When the frequency of an event varies as a power of some attribute of that event , the frequency is said to follow a power law. For instance, the number of cities having a certain population size is found to vary...

. This fact means that even an enormous increase of drilling effort is unlikely to lead to significantly increased oil and gas production in a mature petroleum region like the United States.

Worldwide production trends


World oil production growth trends were flat from 2005 to 2008. According to a January 2007 International Energy Agency
International Energy Agency
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...

 report, global supply (which includes biofuels, non-crude sources of petroleum, and use of strategic oil reserves, in addition to crude production) averaged 85.24 Moilbbl/d in 2006, up 0.76 Moilbbl/d (0.9%), from 2005. Average yearly gains in global supply from 1987 to 2005 were 1.2 Moilbbl/d (1.7%). In 2008, the IEA drastically increased its prediction of production decline from 3.7% a year to 6.7% a year, based largely on better accounting methods, including actual research of individual oil field production throughout the world.
Oil field decline

Of the largest 21 fields, at least 9 are in decline. In April 2006, a Saudi Aramco
Saudi Aramco
Saudi Aramco , officially the Saudi Arabian Oil Company, is the national oil company of Saudi Arabia.Saudi Aramco is the world's largest and most valuable privately-held company, with estimates of its value in 2011 to be $7 trillion USD.Saudi Aramco has both the largest proven crude oil reserves,...

 spokesman admitted that its mature fields are now declining at a rate of 8% per year (with a national composite decline of about 2%). This information has been used to argue that Ghawar, which is the largest oil field in the world and responsible for approximately half of Saudi Arabia's oil production over the last 50 years, has peaked.The world's second largest oil field, the Burgan field
Burgan Field
The onshore Burgan Field in the desert of southeastern Kuwait is one of the world's largest and richest oil fields.-Discovery:After its discovery in February, 1938, the USA and UK-owned Kuwait Oil Company began commercial oil production at Burgan in 1946. The oil field is so rich that it is one of...

 in Kuwait, entered decline in November 2005.

According to a study of the largest 811 oilfields conducted in early 2008 by Cambridge Energy Research Associates
Cambridge Energy Research Associates
Cambridge Energy Research Associates is a consulting company in the United States that specializes in advising governments and private companies on energy markets, geopolitics, industry trends, and strategy...

 (CERA), the average rate of field decline is 4.5% per year. The IEA
International Energy Agency
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...

 stated in November 2008 that an analysis of 800 oilfields showed the decline in oil production to be 6.7% a year, and that this would grow to 8.6% in 2030. There are also projects expected to begin production within the next decade that are hoped to offset these declines. The CERA report projects a 2017 production level of over 100 Moilbbl/d.

Kjell Aleklett of the Association for the Study of Peak Oil and Gas
Association for the Study of Peak Oil and Gas
The Association for the Study of Peak Oil and Gas, or ASPO, is a network of scientists, affiliated with a wide array of global institutions and universities, whose goal is to attempt to determine the date and impact of the peak and decline of the world’s production of oil and gas, due to resource...

 agrees with their decline rates, but considers the rate of new fields coming online—100% of all projects in development, but with 30% of them experiencing delays, plus a mix of new small fields and field expansions—overly optimistic. A more rapid annual rate of decline of 5.1% in 800 of the world's largest oil fields was reported by the International Energy Agency
International Energy Agency
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...

 in their World Energy Outlook 2008
World Energy Outlook
The annual World Energy Outlook is the International Energy Agency's flagship publication and it is widely recognised as the most authoritative energy source for global energy projections and analysis. It represents the leading source for medium to long-term energy market projections, extensive...

.

Mexico announced that its giant Cantarell Field
Cantarell Field
Cantarell Field or Cantarell Complex is an aging supergiant oil field in Mexico. It was discovered in 1976 by a fisherman, Rudesindo Cantarell. It was placed on nitrogen injection in 2000, and production peaked at in 2003. In terms of cumulative production to date, it is by far the largest oil...

 entered depletion in March 2006, due to past overproduction. In 2000, PEMEX
Pemex
Petróleos Mexicanos or Pemex is a Mexican state-owned petroleum company. As of 2010, with a total asset worth of $415.75 billion, it is the second non-publicly listed largest company in the world by total market value, and Latin America's second largest enterprise by annual revenue as of 2009...

 built the largest nitrogen plant in the world in an attempt to maintain production through nitrogen injection into the formation, but by 2006, Cantarell was declining at a rate of 13% per year.

OPEC had vowed in 2000 to maintain a production level sufficient to keep oil prices between $22–28 per barrel, but did not prove possible. In its 2007 annual report, OPEC projected that it could maintain a production level that would stabilize the price of oil at around $50–60 per barrel until 2030. On 18 November 2007, with oil above $98 a barrel, King Abdullah
Abdullah of Saudi Arabia
Abdullah bin Abdul-Aziz Al Saud, Custodian of the Two Holy Mosques, is the King of Saudi Arabia. He succeeded to the throne on 1 August 2005 upon the death of his half-brother, King Fahd. When Crown Prince, he governed Saudi Arabia as regent from 1998 to 2005...

 of Saudi Arabia, a long-time advocate of stabilized oil prices, announced that his country would not increase production to lower prices. Saudi Arabia's inability, as the world's largest supplier, to stabilize prices through increased production during that period suggests that no nation or organization had the spare production capacity to lower oil prices. The implication is that those major suppliers who had not yet peaked were operating at or near full capacity.

Commentators have pointed to the Jack 2
Jack 2
Jack 2 is a test well in the deep waters of the Gulf of Mexico that successfully extracted oil from the lower Tertiary area of the Gulf in the second quarter of 2006. The field owners Chevron, Devon Energy and Norway's Statoil drilled to about below the sea floor, the wellhead being below...

 deep water test well in the Gulf of Mexico
Gulf of Mexico
The Gulf of Mexico is a partially landlocked ocean basin largely surrounded by the North American continent and the island of Cuba. It is bounded on the northeast, north and northwest by the Gulf Coast of the United States, on the southwest and south by Mexico, and on the southeast by Cuba. In...

, announced 5 September 2006, as evidence that there is no imminent peak in global oil production. According to one estimate, the field could account for up to 11% of U.S. production within seven years. However, even though oil discoveries are expected after the peak oil of production is reached, the new reserves of oil will be harder to find and extract. The Jack 2 field, for instance, is more than 20000 feet (6,096 m) under the sea floor in 7000 feet (2,133.6 m) of water, requiring 8.5 kilometres (5.3 mi) of pipe to reach. Additionally, even the maximum estimate of 15 Goilbbl represents slightly less than 2 years of U.S. consumption at present levels.

Control over supply


Entities such as governments or cartels can reduce supply to the world market by limiting access to the supply through nationalizing oil, cutting back on production, limiting drilling rights, imposing taxes, etc. International sanctions, corruption, and military conflicts can also reduce supply.

Nationalization of oil supplies



Another factor affecting global oil supply is the nationalization
Nationalization
Nationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...

 of oil reserves by producing nations. The nationalization of oil occurs as countries begin to deprivatize oil production and withhold exports. Kate Dourian, Platts' Middle East editor, points out that while estimates of oil reserves may vary, politics have now entered the equation of oil supply. "Some countries are becoming off limits. Major oil companies operating in Venezuela find themselves in a difficult position because of the growing nationalization of that resource. These countries are now reluctant to share their reserves."

According to consulting firm PFC Energy, only 7% of the world's estimated oil and gas reserves are in countries that allow companies like ExxonMobil free rein. Fully 65% are in the hands of state-owned companies such as Saudi Aramco, with the rest in countries such as Russia and Venezuela, where access by Western European and North American companies is difficult. The PFC study implies political factors are limiting capacity increases in Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...

, Venezuela, Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

, Iraq
Iraq
Iraq ; officially the Republic of Iraq is a country in Western Asia spanning most of the northwestern end of the Zagros mountain range, the eastern part of the Syrian Desert and the northern part of the Arabian Desert....

, Kuwait
Kuwait
The State of Kuwait is a sovereign Arab state situated in the north-east of the Arabian Peninsula in Western Asia. It is bordered by Saudi Arabia to the south at Khafji, and Iraq to the north at Basra. It lies on the north-western shore of the Persian Gulf. The name Kuwait is derived from the...

, and Russia. Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the other countries. As a result of not having access to countries amenable to oil exploration, ExxonMobil is not making nearly the investment in finding new oil that it did in 1981.

Cartel influence on supply


OPEC is an alliance between 12 diverse oil producing countries (Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela) to control the supply of oil. OPEC's power was consolidated as various countries nationalized their oil holdings, and wrested decision-making away from the "Seven Sisters
Seven Sisters (oil companies)
The "Seven Sisters" was a term coined in the 1950s by businessman Enrico Mattei, then-head of the Italian state oil company Eni, to describe the seven oil companies which formed the "Consortium for Iran" and dominated the global petroleum industry from the mid-1940s to the 1970s...

," (Anglo-Iranian, Socony-Vacuum, Royal Dutch Shell, Gulf, Esso, Texaco, and Socal) and created their own oil companies to control the oil. OPEC tries to influence prices by restricting production. It does this by allocating each member country a quota for production. All 12 members agree to keep prices high by producing at lower levels than they otherwise would. There is no way to verify adherence to the quota, so every member faces the same incentive to ‘cheat’ the cartel. Washington kept the oil flowing and gained favorable OPEC policies mainly by arming, and propping up Saudi regimes. According to some, the purpose for the second Iraq war is to break the back of OPEC and return control of the oil fields to western oil companies.

Alternately, commodities trader Raymond Learsy, author of Over a Barrel: Breaking the Middle East Oil Cartel, contends that OPEC has trained consumers to believe that oil is a much more finite resource than it is. To back his argument, he points to past false alarms and apparent collaboration. He also believes that peak oil analysts are conspiring with OPEC and the oil companies to create a "fabricated drama of peak oil" to drive up oil prices and profits
Profit (accounting)
In accounting, profit can be considered to be the difference between the purchase price and the costs of bringing to market whatever it is that is accounted as an enterprise in terms of the component costs of delivered goods and/or services and any operating or other expenses.-Definition:There are...

. It is worth noting oil had risen to a little over $30/barrel at that time. A counter-argument was given in the Huffington Post after he and Steve Andrews, co-founder of ASPO, debated on CNBC in June 2007.

Timing of peak oil


In Feb 2010 the US Joint Forces Command issued the Joint Operating Environment 2010 warning US military commands "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day."

"A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest."

"Energy production and distribution infrastructure must see significant new investment if energy demand is to be satisfied at a cost compatible with economic growth and prosperity."

"The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields."

The military warning of timing issue is graphically noted in the International Energy Agency
International Energy Agency
The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the 1973 oil crisis...

's (IEA) World Energy Outlook 2010. The IEA graph notes that depleting conventional oil will be replaced by "fields yet to be found" and "fields yet to be developed."

M. King Hubbert
M. King Hubbert
Marion King Hubbert was a geoscientist who worked at the Shell research lab in Houston, Texas. He made several important contributions to geology, geophysics, and petroleum geology, most notably the Hubbert curve and Hubbert peak theory , with important political ramifications. He was often...

 initially predicted in 1974 that peak oil would occur in 1995 "if current trends continue." However, in the late 1970s and early 1980s, global oil consumption
Consumption (economics)
Consumption is a common concept in economics, and gives rise to derived concepts such as consumer debt. Generally, consumption is defined in part by comparison to production. But the precise definition can vary because different schools of economists define production quite differently...

 actually dropped (due to the shift to energy-efficient
Efficient energy use
Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...

 cars, the shift to electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...

 and natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...

 for heating, and other factors), then rebounded to a lower level of growth in the mid 1980s. Thus oil production did not peak in 1995, and has climbed to more than double the rate initially projected. This underscores the fact that the only reliable way to identify the timing of peak oil will be in retrospect. However, predictions have been refined through the years as up-to-date information becomes more readily available, such as new reserve growth data. Predictions of the timing of peak oil include the possibilities that it has recently occurred, that it will occur shortly, or that a plateau of oil production will sustain supply for up to 100 years. None of these predictions dispute the peaking of oil production, but disagree only on when it will occur.

According to Matthew Simmons
Matthew Simmons
Matthew Roy Simmons was founder and chairman emeritus of Simmons & Company International, and was a prominent advocate of peak oil. Simmons was motivated by the 1973 energy crisis to create an investment banking firm catering to oil companies. In his previous capacity, he served as energy...

, former Chairman of Simmons & Company International
Simmons & Company International
Simmons & Company International is a private investment bank based in Houston, Texas, that specializes in energy research, trading, and capital structuring. It was founded in 1974 by Matthew Simmons who was motivated by the 1973 energy crisis to create an investment banking firm catering to oil...

 and author of Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, "...peaking is one of these fuzzy events that you only know clearly when you see it through a rear view mirror, and by then an alternate resolution is generally too late."

Possible consequences of peak oil



The wide use of fossil fuels has been one of the most important stimuli of economic growth
Economic growth
In economics, economic growth is defined as the increasing capacity of the economy to satisfy the wants of goods and services of the members of society. Economic growth is enabled by increases in productivity, which lowers the inputs for a given amount of output. Lowered costs increase demand...

 and prosperity since the industrial revolution
Industrial Revolution
The Industrial Revolution was a period from the 18th to the 19th century where major changes in agriculture, manufacturing, mining, transportation, and technology had a profound effect on the social, economic and cultural conditions of the times...

, allowing humans to participate in takedown, or the consumption of energy at a greater rate than it is being replaced. Some believe that when oil production decreases, human culture, and modern technological society will be forced to change drastically. The impact of peak oil will depend heavily on the rate of decline and the development and adoption of effective alternatives
Mitigation of peak oil
The mitigation of peak oil is the attempt to delay the date and minimize the social and economic impact of peak oil by reducing the world's consumption and reliance on petroleum. By reducing petroleum consumption, mitigation efforts seek to favorably change the shape of the Hubbert curve, which is...

. If alternatives are not forthcoming, the products produced with oil
Petrochemical
Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels, such as coal or natural gas, or renewable sources such as corn or sugar cane....

 (including fertilizers, detergents, solvents, adhesives, and most plastic
Plastic
A plastic material is any of a wide range of synthetic or semi-synthetic organic solids used in the manufacture of industrial products. Plastics are typically polymers of high molecular mass, and may contain other substances to improve performance and/or reduce production costs...

s) would become scarce and expensive.

In 2005, the United States Department of Energy
United States Department of Energy
The United States Department of Energy is a Cabinet-level department of the United States government concerned with the United States' policies regarding energy and safety in handling nuclear material...

 published a report titled Peaking of World Oil Production: Impacts, Mitigation, & Risk Management. Known as the Hirsch report
Hirsch report
The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005....

, it stated, "The peaking of world oil production presents the U.S. and the world with an unprecedented risk management problem. As peaking is approached, liquid fuel prices and price volatility will increase dramatically, and, without timely mitigation, the economic, social, and political costs will be unprecedented. Viable mitigation options exist on both the supply and demand sides, but to have substantial impact, they must be initiated more than a decade in advance of peaking."

Historical oil prices



The oil price historically was comparatively low until the 1973 oil crisis
1973 oil crisis
The 1973 oil crisis started in October 1973, when the members of Organization of Arab Petroleum Exporting Countries or the OAPEC proclaimed an oil embargo. This was "in response to the U.S. decision to re-supply the Israeli military" during the Yom Kippur war. It lasted until March 1974. With the...

 and the 1979 energy crisis
1979 energy crisis
The 1979 oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979 and the Ayatollah Khomeini soon became the new leader of Iran. Protests severely disrupted the Iranian oil...

 when it increased more than tenfold during that six year timeframe. Even though the oil price dropped significantly in the following years, it has never come back to the previous levels. After almost fifteen years of relative stability, the oil price began to increase again during the 2000s until it hit historical heights of $143 per barrel (2007 inflation adjusted dollars) on 30 June 2008. As these prices were well above those that caused the 1973 and 1979 energy crises
1979 energy crisis
The 1979 oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979 and the Ayatollah Khomeini soon became the new leader of Iran. Protests severely disrupted the Iranian oil...

, they have contributed to fears of an economic recession similar to that of the early 1980s. These fears were not without a basis, since the high oil prices began having an effect on the economies, as, for example, indicated by gasoline consumption drop of 0.5% in the first two months of 2008 in the United States. compared to a drop of .4% total in 2007.

It is agreed that the main reason for the price spike in 2005-2008 was strong demand pressure. For example, global consumption of oil rose from 30 Goilbbl in 2004 to 31 billion in 2005. The consumption rates were far above new discoveries in the period, which had fallen to only eight billion barrels of new oil reserves in new accumulations in 2004.

Oil price increases were partially fueled by reports that petroleum production is at or near full capacity. In June 2005, OPEC admitted that they would 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of that year. The decline in the U.S. dollar against other significant currencies from 2007 to 2008 is also cited as a significant reason for the oil price increases, as the dollar lost approximately 14% of its value against the Euro from May 2007 to May 2008.

Besides supply and demand pressures, at times security related factors may have contributed to increases in prices, including the War on Terror
War on Terror
The War on Terror is a term commonly applied to an international military campaign led by the United States and the United Kingdom with the support of other North Atlantic Treaty Organisation as well as non-NATO countries...

, missile launches in North Korea
North Korea
The Democratic People’s Republic of Korea , , is a country in East Asia, occupying the northern half of the Korean Peninsula. Its capital and largest city is Pyongyang. The Korean Demilitarized Zone serves as the buffer zone between North Korea and South Korea...

, the Crisis between Israel and Lebanon
2006 Israel-Lebanon conflict
The 2006 Lebanon War, also called the 2006 Israel-Hezbollah War and known in Lebanon as the July War #Other uses|Tammūz]]) and in Israel as the Second Lebanon War , was a 34-day military conflict in Lebanon, northern Israel and the Israeli-occupied territories. The principal parties were Hezbollah...

, nuclear brinkmanship
Brinkmanship
Brinkmanship is the practice of pushing dangerous events to the verge of disaster in order to achieve the most advantageous outcome...

 between the U.S. and Iran
Iran
Iran , officially the Islamic Republic of Iran , is a country in Southern and Western Asia. The name "Iran" has been in use natively since the Sassanian era and came into use internationally in 1935, before which the country was known to the Western world as Persia...

, and reports from the U.S. Department of Energy and others showing a decline in petroleum reserves.

Effects of rising oil prices



In the past, the price of oil has led to economic recession
Recession
In economics, a recession is a business cycle contraction, a general slowdown in economic activity. During recessions, many macroeconomic indicators vary in a similar way...

s, such as the 1973 and 1979 energy crises
1979 energy crisis
The 1979 oil crisis in the United States occurred in the wake of the Iranian Revolution. Amid massive protests, the Shah of Iran, Mohammad Reza Pahlavi, fled his country in early 1979 and the Ayatollah Khomeini soon became the new leader of Iran. Protests severely disrupted the Iranian oil...

. The effect the price of oil has on an economy is known as a price shock. In many European countries, which have high taxes on fuels, such price shocks could potentially be mitigated somewhat by temporarily or permanently suspending the taxes as fuel costs rise. This method of softening price shocks is less useful in countries with much lower gas taxes, such as the United States.

Some economists predict that a substitution effect will spur demand for alternate energy sources
Alternative fuel
Alternative fuels, known as non-conventional or advanced fuels, are any materials or substances that can be used as fuels, other than conventional fuels...

, such as coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...

 or liquefied natural gas
Liquefied natural gas
Liquefied natural gas or LNG is natural gas that has been converted temporarily to liquid form for ease of storage or transport....

. This substitution can only be temporary, as coal and natural gas are finite resources as well.

Prior to the run-up in fuel prices, many motorists opted for larger, less fuel-efficient sport utility vehicles and full-sized pickups in the United States, Canada, and other countries. This trend has been reversing due to sustained high prices of fuel. The September 2005 sales data for all vehicle vendors indicated SUV sales dropped while small cars sales increased. Hybrid and diesel
Diesel engine
A diesel engine is an internal combustion engine that uses the heat of compression to initiate ignition to burn the fuel, which is injected into the combustion chamber...

 vehicles are also gaining in popularity.

In 2008, a report by Cambridge Energy Research Associates
Cambridge Energy Research Associates
Cambridge Energy Research Associates is a consulting company in the United States that specializes in advising governments and private companies on energy markets, geopolitics, industry trends, and strategy...

 stated that 2007 had been the year of peak gasoline usage in the United States, and that record energy prices would cause an "enduring shift" in energy consumption practices. According to the report, in April gas consumption had been lower than a year before for the sixth straight month, suggesting 2008 would be the first year U.S. gasoline usage declined in 17 years. The total miles driven in the U.S. peaked in 2006.

The Export Land Model
Export Land Model
The Export Land Model, or Export-Land Model, refers to work done by Dallas geologist Jeffrey Brown, building on the work of others, and discussed widely on The Oil Drum. It models the decline in oil exports that result when an exporting nation experiences both a peak in oil production and an...

 states that after peak oil petroleum exporting countries will be forced to reduce their exports more quickly than their production decreases because of internal demand growth. Countries that rely on imported petroleum will therefore be affected earlier and more dramatically than exporting countries. Mexico is already in this situation. Internal consumption grew by 5.9% in 2006 in the five biggest exporting countries, and their exports declined by over 3%. It was estimated that by 2010 internal demand would decrease worldwide exports by 2500000 oilbbl/d.

Canadian economist Jeff Rubin has stated that high oil prices will likely result in increased consumption in developed countries through partial manufacturing de-globalisation of trade. Manufacturing production would move closer to the end consumer to minimise transportation network costs, and therefore a demand decoupling from Gross Domestic Product would occur. Higher oil prices would lead to increased freighting costs and consequently, the manufacturing industry would move back to the developed countries since freight costs would outweigh the current economic wage advantage of developing countries.

Economic research carried out by the International Monetary Fund
International Monetary Fund
The International Monetary Fund is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world...

 puts overall price elasticity of demand
Price elasticity of demand
Price elasticity of demand is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price...

 for oil at -0.025 short term and -0.093 long term.

Long-term effects on lifestyle


A majority of Americans live in suburbs, a type of low-density settlement designed around universal personal automobile
Automobile
An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

 use. Commentators such as James Howard Kunstler
James Howard Kunstler
James Howard Kunstler is an American author, social critic, public speaker, and blogger. He is best known for his books The Geography of Nowhere , a history of American suburbia and urban development, and the more recent The Long Emergency , where he argues that declining oil production is likely...

 argue that because over 90% of transportation in the U.S. relies on oil, the suburbs' reliance on the automobile is an unsustainable living arrangement. Peak oil would leave many Americans unable to afford petroleum based fuel for their cars, and force them to use bicycles or electric vehicles. Additional options include telecommuting
Telecommuting
Telecommuting or telework is a work arrangement in which employees enjoy flexibility in working location and hours. In other words, the daily commute to a central place of work is replaced by telecommunication links...

, moving to rural areas, or moving to higher density areas, where walking and public transportation are more viable options. In the latter two cases, suburbia may become the "slum
Slum
A slum, as defined by United Nations agency UN-HABITAT, is a run-down area of a city characterized by substandard housing and squalor and lacking in tenure security. According to the United Nations, the percentage of urban dwellers living in slums decreased from 47 percent to 37 percent in the...

s of the future." The issues of petroleum supply and demand is also a concern for growing cities in developing countries (where urban areas are expected to absorb most of the world's projected 2.3 billion population increase by 2050). Stressing the energy component of future development plans is seen as an important goal.

Methods that have been suggested for mitigating these urban and suburban issues include the use of non-petroleum vehicles such as electric car
Electric car
An electric car is an automobile which is propelled by electric motor, using electrical energy stored in batteries or another energy storage device. Electric cars were popular in the late-19th century and early 20th century, until advances in internal combustion engine technology and mass...

s, battery electric vehicles, transit-oriented development
Transit-oriented development
A transit-oriented development is a mixed-use residential or commercial area designed to maximize access to public transport, and often incorporates features to encourage transit ridership...

, Car-free Cities, bicycle
Bicycle
A bicycle, also known as a bike, pushbike or cycle, is a human-powered, pedal-driven, single-track vehicle, having two wheels attached to a frame, one behind the other. A person who rides a bicycle is called a cyclist, or bicyclist....

s, new trains
Light rail
Light rail or light rail transit is a form of urban rail public transportation that generally has a lower capacity and lower speed than heavy rail and metro systems, but higher capacity and higher speed than traditional street-running tram systems...

, new pedestrianism
New pedestrianism
New Pedestrianism is a more idealistic variation of New Urbanism in urban planning theory, founded in 1999 by Michael E. Arth, an American artist, urban/home/landscape designer, futurist, and author...

, smart growth
Smart growth
Smart growth is an urban planning and transportation theory that concentrates growth in compact walkable urban centers to avoid sprawl and advocates compact, transit-oriented, walkable, bicycle-friendly land use, including neighborhood schools, complete streets, and mixed-use development with a...

, shared space
Shared space
Shared space is an urban design concept aimed at integrated use of public spaces. It encourages traffic engineers, urban planners and experts from other fields to consult with users of public space when planning and designing streets and squares in both built and non-built environments...

, urban consolidation
Urban consolidation
Urban consolidation refers to a diverse set of planning policies intended to make better use of existing urban infrastructure by encouraging development within existing urbanised areas rather than on non-urbanised land , thus limiting urban sprawl...

, urban village
Urban village
An urban village is an urban planning and urban design concept. It refers to an urban form typically characterized by:* Medium density development* Mixed use zoning* The provision of good public transit...

s, and New Urbanism
New urbanism
New Urbanism is an urban design movement, which promotes walkable neighborhoods that contain a range of housing and job types. It arose in the United States in the early 1980s, and has gradually continued to reform many aspects of real estate development, urban planning, and municipal land-use...

.

An extensive 2009 report by the United States National Research Council
United States National Research Council
The National Research Council of the USA is the working arm of the United States National Academies, carrying out most of the studies done in their names.The National Academies include:* National Academy of Sciences...

 of the Academy of Sciences
United States National Academy of Sciences
The National Academy of Sciences is a corporation in the United States whose members serve pro bono as "advisers to the nation on science, engineering, and medicine." As a national academy, new members of the organization are elected annually by current members, based on their distinguished and...

, commissioned by the United States Congress, stated six main findings. First, that compact development is likely to reduce "Vehicle Miles Traveled" (VMT) throughout the country. Second, that doubling residential density in a given area could reduce VMT by as much as 25% if coupled with measures such as increased employment density and improved public transportation. Third, that higher density, mixed-use developments would produce both direct reductions in emissions (from less driving), and indirect reductions (such as from lower amounts of materials used per housing unit, higher efficiency climate control, longer vehicle lifespans, and higher efficiency delivery of goods and services). Fourth, that although short term reductions in energy use and emissions would be modest, that these reductions would grow over time. Fifth, that a major obstacle to more compact development in the United States is political resistance from local zoning regulators, which would hamper efforts by state and regional governments to participate in land-use planning. Sixth, the committee agreed that changes in development that would alter driving patterns and building efficiency would have various secondary costs and benefits that are difficult to quantify. The report recommends that policies supporting compact development (and especially its ability to reduce driving, energy use, and emissions) should be encouraged.

An economic theory that has been proposed as a remedy is the introduction of a steady state economy. Such a system would include a tax shifting from income to depleting natural resources (and pollution), as well as the limitation of advertising that stimulates demand and population growth. It also includes the institution of policies that move away from globalization and toward localization to conserve energy resources, provide local jobs, and maintain local decision-making authority. Zoning policies would be adjusted to promote resource conservation and eliminate sprawl.

Mitigation



To avoid the serious social
Society
A society, or a human society, is a group of people related to each other through persistent relations, or a large social grouping sharing the same geographical or virtual territory, subject to the same political authority and dominant cultural expectations...

 and economic
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...

 implications a global decline in oil production could entail, the 2005 Hirsch report
Hirsch report
The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005....

 emphasized the need to find alternatives, at least ten to twenty years before the peak, and to phase out the use of petroleum over that time. This was similar to a plan proposed for Sweden
Oil phase-out in Sweden
In 2005 the government of Sweden appointed a commission to draw up a comprehensive programme to reduce Sweden's dependence on petroleum, natural gas and other ‘fossil raw materials’ by 2020. In June 2006 the commission issued its report, entitled Making Sweden an OIL-FREE Society...

 that same year. Such mitigation
Mitigation of peak oil
The mitigation of peak oil is the attempt to delay the date and minimize the social and economic impact of peak oil by reducing the world's consumption and reliance on petroleum. By reducing petroleum consumption, mitigation efforts seek to favorably change the shape of the Hubbert curve, which is...

 could include energy conservation, fuel substitution, and the use of unconventional oil. Because mitigation can reduce the use of traditional petroleum sources, it can also affect the timing of peak oil and the shape of the Hubbert curve.

Positive aspects of peak oil


Some observers opine that peak oil should be viewed as a positive event. Many such critics reason that if the price of oil rises high enough, the use of alternative clean fuels could help control pollution from fossil fuel use, and mitigate global warming
Global warming
Global warming refers to the rising average temperature of Earth's atmosphere and oceans and its projected continuation. In the last 100 years, Earth's average surface temperature increased by about with about two thirds of the increase occurring over just the last three decades...

. Permaculture
Permaculture
Permaculture is an approach to designing human settlements and agricultural systems that is modeled on the relationships found in nature. It is based on the ecology of how things interrelate rather than on the strictly biological concerns that form the foundation of modern agriculture...

, particularly as expressed in the work of Australian David Holmgren, and others, sees peak oil as holding tremendous potential for positive change, assuming countries act with foresight. The rebuilding of local food networks, energy production, and the general implementation of 'energy descent
Energy descent
Energy descent is the post-peak oil transitional phase, when humankind goes from the ascending use of energy that has occurred since the industrial revolution to a descending use of energy....

 culture' are argued to be ethical responses to the acknowledgment of finite fossil resources.

The Transition Towns
Transition Towns
Transition Towns is a grassroots network of communities that are working to build resilience in response to peak oil, climate destruction, and economic instability...

 movement, started in Totnes
Totnes
Totnes is a market town and civil parish at the head of the estuary of the River Dart in Devon, England within the South Devon Area of Outstanding Natural Beauty...

, Devon
Devon
Devon is a large county in southwestern England. The county is sometimes referred to as Devonshire, although the term is rarely used inside the county itself as the county has never been officially "shired", it often indicates a traditional or historical context.The county shares borders with...

 and spread internationally by "The Transition Handbook" (Rob Hopkins), sees the restructuring of society for more local resilience and ecological stewardship as a natural response to the combination of peak oil and climate change.

Criticisms


Some do not agree with peak oil, at least as it has been presented by Matthew Simmons
Matthew Simmons
Matthew Roy Simmons was founder and chairman emeritus of Simmons & Company International, and was a prominent advocate of peak oil. Simmons was motivated by the 1973 energy crisis to create an investment banking firm catering to oil companies. In his previous capacity, he served as energy...

. The president of Royal Dutch Shell's
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...

 U.S. operations John Hofmeister, while agreeing that conventional oil production will soon start to decline, has criticized Simmons's analysis for being "overly focused on a single country: Saudi Arabia, the world's largest exporter and OPEC swing producer
Swing producer
Swing producer is a supplier or a close oligopolistic group of suppliers of any commodity, controlling its global deposits and possessing large spare manufacturing capacity...

." He also points to the large reserves at the U.S. outer continental shelf
Outer Continental Shelf
The Outer Continental Shelf is a peculiarity of the political geography of the United States and is the part of the internationally recognized continental shelf of the United States which does not fall under the jurisdictions of the individual U.S...

, which holds an estimated 100 Goilbbl of oil and natural gas. As things stand, however, only 15% of those reserves are currently exploitable, a good part of that off the coasts of Louisiana, Alabama, Mississippi, and Texas. Hofmeister also contends that Simmons erred in excluding unconventional sources of oil such as the oil sands of Canada, where Shell is already active. The Canadian oil sands—a natural combination of sand, water, and oil found largely in Alberta and Saskatchewan—is believed to contain one trillion barrels of oil. Another trillion barrels are also said to be trapped in rocks in Colorado, Utah, and Wyoming, but are in the form of oil shale
Oil shale
Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen from which liquid hydrocarbons called shale oil can be produced...

. These particular reserves present major environmental, social, and economic obstacles to recovery. Hofmeister also claims that if oil companies were allowed to drill more in the United States enough to produce another 2 Moilbbl/d, oil and gas prices would not be as high as they are in the later part of the 2000 to 2010 decade. He thinks that high energy prices are causing social unrest similar to levels surrounding the Rodney King riots
1992 Los Angeles riots
The 1992 Los Angeles Riots or South Central Riots, also known as the 1992 Los Angeles Civil Unrest were sparked on April 29, 1992, when a jury acquitted three white and one hispanic Los Angeles Police Department officers accused in the videotaped beating of black motorist Rodney King following a...

.

Dr. Christoph Rühl, chief economist of BP, repeatedly uttered strong doubts about the peak oil
hypothesis:

Physical peak oil, which I have no reason to accept as a valid statement either on theoretical, scientific or ideological grounds, would be insensitive to prices. (...)In fact the whole hypothesis of peak oil – which is that there is a certain amount of oil in the ground, consumed at a certain rate, and then it's finished – does not react to anything.... (Global Warming) is likely to be more of a natural limit than all these peak oil theories combined. (...) Peak oil has been predicted for 150 years. It has never happened, and it will stay this way.


According to Rühl, the main limitations for oil availability are "above ground" and are to be found in the availability of staff, expertise, technology, investment security, money and last but not least in global warming. The oil question is about price and not the basic availability. His views are shared by Daniel Yergin
Daniel Yergin
Daniel Howard Yergin is an American author, speaker, and economic researcher. Yergin is the co-founder and chairman of Cambridge Energy Research Associates, an energy research consultancy. It was acquired by IHS Inc...

 of CERA
Cambridge Energy Research Associates
Cambridge Energy Research Associates is a consulting company in the United States that specializes in advising governments and private companies on energy markets, geopolitics, industry trends, and strategy...

, who added that the recent high price phase might add to a future demise of the oil industry - not of lack of resources or an apocalyptic shock but the timely and smooth setup of alternatives.

Clive Mather, CEO of Shell Canada, said the Earth's supply of hydrocarbons is almost infinite, referring to hydrocarbons in oil sands. Engineer Peter Huber believes the Canadian oil sands can fuel all of humanity's needs for over 100 years.

Industry blogger Steve Maley echoed some of the points of Yergin, Rühl, Mather and Hofmeister.

Prediction

  • Ecoflation
    Ecoflation
    Ecoflation is a term used to describe a future scenario in "Rattling Supply Chains," a research report by the World Resources Institute and A.T. Kearney released in November 2008...

  • Hirsch report
    Hirsch report
    The Hirsch report, the commonly referred to name for the report Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, was created by request for the US Department of Energy and published in February 2005....

  • Hubbert Linearization
    Hubbert Linearization
    The Hubbert Linearization is a way to plot production data to estimate two important parameters of a Hubbert curve; the logistic growth rate and the quantity of the resource that will be ultimately recovered...

  • Limits to Growth
    Limits to Growth
    The Limits to Growth is a 1972 book modeling the consequences of a rapidly growing world population and finite resource supplies, commissioned by the Club of Rome. Its authors were Donella H. Meadows, Dennis L. Meadows, Jørgen Randers, and William W. Behrens III. The book used the World3 model to...

  • Malthusian catastrophe
    Malthusian catastrophe
    A Malthusian catastrophe was originally foreseen to be a forced return to subsistence-level conditions once population growth had outpaced agricultural production...

  • Oil depletion
    Oil depletion
    Oil depletion occurs in the second half of the production curve of an oil well, oil field, or the average of total world oil production. The Hubbert peak theory makes predictions of production rates based on prior discovery rates and anticipated production rates. Hubbert curves predict that the...

  • Oil Storm
    Oil Storm
    Oil Storm is a 2005 television docudrama portraying a future oil-shortage crisis in the United States, precipitated by a hurricane destroying key parts of the United States' oil infrastructure...

  • Olduvai theory
    Olduvai theory
    The Olduvai theory states that industrial civilization will have a lifetime of less than or equal to 100 years . The theory provides a quantitative basis of the transient-pulse theory of modern civilization...

  • World energy resources and consumption
    World energy resources and consumption
    ]World energy consumption in 2010: over 5% growthEnergy markets have combined crisis recovery and strong industry dynamism. Energy consumption in the G20 soared by more than 5% in 2010, after the slight decrease of 2009. This strong increase is the result of two converging trends...


Energy policy

  • Energy development
    Energy development
    Energy development is the effort to provide sufficient primary energy sources and secondary energy forms for supply, cost, impact on air pollution and water pollution, mitigation of climate change with renewable energy....

  • Energy security
    Energy security
    Energy security is a term for an association between national security and the availability of natural resources for energy consumption. Access to cheap energy has become essential to the functioning of modern economies. However, the uneven distribution of energy supplies among countries has led...

  • Global strategic petroleum reserves
    Global strategic petroleum reserves
    Global strategic petroleum reserves refer to crude oil inventories held by the government of a particular country, as well as private industry, for the purpose of providing economic and national security during an energy crisis...

  • OPEC
    OPEC
    OPEC is an intergovernmental organization of twelve developing countries made up of Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC has maintained its headquarters in Vienna since 1965, and hosts regular meetings...

  • Renewable energy
    Renewable energy
    Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...

  • Soft energy path
    Soft energy path
    In 1976 energy policy analyst Amory Lovins coined the term soft energy path to describe an alternative future where energy efficiency and appropriate renewable energy sources steadily replace a centralized energy system based on fossil and nuclear fuels....


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Economics

  • Ecological economics
    Ecological economics
    Image:Sustainable development.svg|right|The three pillars of sustainability. Clickable.|275px|thumbpoly 138 194 148 219 164 240 182 257 219 277 263 291 261 311 264 331 272 351 283 366 300 383 316 394 287 408 261 417 224 424 182 426 154 423 119 415 87 403 58 385 40 368 24 347 17 328 13 309 16 286 26...

  • Efficient energy use
    Efficient energy use
    Efficient energy use, sometimes simply called energy efficiency, is the goal of efforts to reduce the amount of energy required to provide products and services. For example, insulating a home allows a building to use less heating and cooling energy to achieve and maintain a comfortable temperature...

  • Gross domestic product per barrel
    Gross domestic product per barrel
    Energy efficiency as it relates to oil usage can be described by the gross domestic product per barrel of oil used . The original data for this is taken from two sources, the and the List of countries by GDP article from Wikipedia...

  • Kuznets curve
    Kuznets curve
    A Kuznets curve is the graphical representation of Simon Kuznets' hypothesis that economic inequality increases over time while a country is developing, and then after a certain average income is attained, inequality begins to decrease....

  • List of countries by proven oil reserves
  • List of oil-consuming states
  • Low-carbon economy
    Low-carbon economy
    A Low-Carbon Economy or Low-Fossil-Fuel Economy is an economy that has a minimal output of greenhouse gas emissions into the environment biosphere, but specifically refers to the greenhouse gas carbon dioxide...

  • Oil burden
    Oil burden
    Oil burden is the volume of petroleum consumed multiplied by the average price and divided by nominal gross domestic product.This gives the proportion of the world economy devoted to buying oil. It is a concept developed by Veronique Riches-Flores of Société Générale. It is also referred to as...

  • Oil price increases since 2003
  • Steady state economics
  • 2000s commodities boom
    2000s commodities boom
    The 2000s commodities boom is the rise in many physical commodity prices which occurred during the decade of the 2000s , following the Great Commodities Depression of the 1980s and 1990s...


Others

  • Age of Oil
  • Oil Shockwave
    Oil Shockwave
    The Oil Shockwave event was a policy wargaming scenario created by the joint effort of several energy policy think tanks, the National Commission on Energy Policy and Securing America's Future Energy. It outlined a series of hypothetical international events taking place in December 2005, all...

  • Other risks to civilization, humans and planet Earth
    Risks to civilization, humans and planet Earth
    Various existential risks could threaten humankind as a whole, have adverse consequences for the course of human civilization, or even cause the end of planet Earth.-Types of risks:...

  • Over-consumption
    Over-consumption
    Over-consumption is a situation where resource-use has outpaced the sustainable capacity of the ecosystem. A prolonged pattern of overconsumption leads to inevitable environmental degradation and the eventual loss of resource bases...

  • Overpopulation
    Overpopulation
    Overpopulation is a condition where an organism's numbers exceed the carrying capacity of its habitat. The term often refers to the relationship between the human population and its environment, the Earth...

  • Peak coal
    Peak coal
    Peak coal is the point in time at which the maximum global coal production rate is reached, after which, according to the theory, the rate of production will enter to a terminal decline. Coal is a fossil fuel formed from plant matter over the course of millions of years...

  • Peak gas
    Peak gas
    Peak gas is the point in time at which the maximum global natural gas production rate is reached, after which the rate of production enters its terminal decline. Natural gas is a fossil fuel formed from plant matter over the course of millions of years. It is a finite resource and thus considered...

  • Peak uranium
    Peak uranium
    Peak uranium is the point in time that the maximum global uranium production rate is reached. After that peak, the rate of production enters a terminal decline. While uranium is used in nuclear weapons, its primary use is for energy generation via nuclear fission of uranium-235 isotope in a nuclear...

  • Peak car
    Peak car
    Peak car or peak car use or peak travel is the theory that car usage rates, or overall travel rates, are dropping in at least eight major developed countries including the UK, Australia, America and Japan. Similar to peak oil, peak car theory holds that travel usage per capita reaches a peak and...

  • ACEGES
    ACEGES
    The ACEGES is a decision-support tool for energy policy by means of controlled computational experiments. The ACEGES tool is designed to be the foundation for large custom-purpose simulations of the global energy system...


|}

Documentary films

  • The End of Suburbia: Oil Depletion and the Collapse of the American Dream
    The End of Suburbia
    The End of Suburbia: Oil Depletion and the Collapse of The American Dream is a 2004 documentary film concerning peak oil and its implications for the suburban lifestyle, written and directed by Toronto-based filmmaker Gregory Greene....

    (2004)
  • Crude Awakening: The Oil Crash
    Crude Awakening: The Oil Crash
    A Crude Awakening: The Oil Crash is an award-winning documentary film about peak oil, produced and directed by Basil Gelpke and Ray McCormack.-Overview:...

    (2006)
  • The Power of Community: How Cuba Survived Peak Oil
    The Power of Community: How Cuba Survived Peak Oil
    The Power of Community: How Cuba Survived Peak Oil is an American documentary film that explores the Special Period in Peacetime and its aftermath; the economic collapse and eventual recovery of Cuba following the fall of the Soviet Union in 1991...

    (2006)
  • Crude Impact
    Crude Impact
    Crude Impact is a 2006 film written and directed by James Jandak Wood. It is a documentary about the effect of fossil fuels on issues such as global warming, the environmental crisis, society and the questionable practices of oil companies...

    (2006)
  • What a Way to Go: Life at the End of Empire
    What a Way to Go: Life at the End of Empire
    What A Way To Go: Life at the End of Empire is a 2007 documentary film about the current situation facing humanity and the world. It discusses issues such as peak oil, climate change, population overshoot and species extinction, as well as how this situation has developed...

    (2007)
  • PetroApocalypse Now?
    PetroApocalypse Now?
    PetroApocalypse Now? is a 2008 documentary about the future of global oil production and peak oil. -Overview:PetroApocalypse Now? examines the arguments surrounding peak oil from both sides of the debate...

    (2008)
  • Collapse
    Collapse (film)
    Collapse, directed by Chris Smith, is an American documentary film exploring the theories, writings and life story of controversial author Michael Ruppert...

    (2009)
  • Blind Spot
    Blind spot
    Blind spot may refer to:In ophthalmology:*Scotoma, an obscuration of the visual field*Optic disc, also known as the anatomical blind spot, the specific region of the retina where the optic nerve and blood vessels pass through to connect to the back of the eye*Blind spot , also known as the...

    (2008)

External links