What is Peak Oil
Posted by Frugal on July 18th, 2006
If you have never heard about peak oil, then you really should read about it in earnest, RIGHT NOW. Search on Google and read everything that you can about it. If it is real, which I think it is, it is going to change the way we live on Earth. It will be a paradigm shift.
Peak oil is a theory by Hubbert, a geologist at Shell. It’s also called the Hubbert’s peak. Essentially, it is based on empirical evidences that the production of oil (or any commodities) follows a Gaussian normal distribution or bell-shaped curve. And by all best estimates, the peak of this bell-shaped curve is from 2005 to 2010. In fact, some experts have declared that peak oil is behind us already. Hubbert gave two predictions in 1956, one of them dated that US oil production will peak around 1970s, and the peak turned out to be the year of 1970. US oil production has ever since gone into decline. However, at the time of Hubbert making such prediction, he was ridiculed widely for his opinions.
You may ask why a normal distribution curve. In fact, this curve is the most sensible curve out of all. In the theories of probabilities, there is a theorem called the Central Limit Theorem. It proves that any sum of MANY independent identically distributed random variables will approach the normal distribution when the number of variables approach very large. Although I never saw anyone tries to make a proof from the Central Limit Theorem to the oil production curve, intuitively I believe that both can borrow the same mathematical framework. One simply needs to treat every small or big oil field as an independent random event, and the final sum approach the normal distribution curve.
So here is a theory of peak oil that is based on empirical evidences and has been formerly shown to render correct prediction. In fact, not just oil, but many production of basic materials follow such curve. Many other people have tried to date the peak for global oil production. Some dates go as far as 2020. I do know for a fact that because of the technology advancement in secondary and tertiary extraction from the oil fields, most likely the peak can be postponed by a little somehow. But whatever extra production that you get now, you will be hit by the accelerated decline in production post-peak.
Based on what is happening currently, I have reasons to believe that we are right at the peak of global oil production. You can read more about it in the book of by Matt Simmons, where he discussed his findings on the oil fields of Saudi Arabia. I heard from financialsense that Saudi Arabia has paid some 4X amount of money to obtain the oil digging rigs around the world, frantically trying to making up any amount of shortfall in their oil production.
What are the implications and ramifications of Peak Oil if it is true and we’re close to the peak (if not behind it)? At the time of the two most populated countries China and India coming to join the world as the new capitalists, improving their living standards, and therefore increasing dramatically their usage of oil and natural resources around the world, global oil demand has stepped on the acceralated pedal. Unfortunately, oil production appears to be almost at the peak. If you recall from the basic of economics, supply/demand curve, with dwindling supply and increasing demand, the only resolution for price is to go up. What’s even worse is that both the supply and demand are relatively inelastic. Supply cannot be increased without dramatically higher price; demand cannot be decreased with our current economic and transportation infrastructure. Relative inelasticity will simply worsen the crude oil price picture.
Here are some more books & websites on Peak Oil. If you have time & money, I suggest you try to read as much as you can about this topic. When I first visited Life After Oil Crash, I was really depressed about the bleak outlook. However, I was able to climb out quickly due to my religious belief and my general optimism. Just be aware not to sink too deep emotionally. But do reflect on all the facts. After all, even a physics professor David Goldstein at Caltech (top three, if not #1 university in science in the US) has subscribed to the theory of peak oil.
Unfortunately, the development of alternative energy sources and most importantly the infrastructures are so far behind that I doubt that if peak oil is upon us, mankind would be able to come out of the crisis without some serious economic and social upheavals.
P.S. Due to the lack of my time, I would really appreciate anyone who can write some very short summaries or comments on any links or books so that everyone can benefit from it. Thanks. By the way, I bought Hubbert’s Peak, and it has too much technical information for non-geologists. Personally, I would suggest trying Golstein, Simmon’s books.
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July 18th, 2006 at 2:21 pm
Peak Oil scares the crap out of me. When I first read about Peak Oil in late 2005 I tried to think of all the things I could do to prepare. But in the end I decided to carry on and rely on science to come up with the answer. Yes we are going to run out of oil, but places like 1000 B.C. Rome had huge populations and they did fine. I may be naive, but this is what I must think to live a ‘normal’ life. I can’t just live in the bush somewhere.
July 18th, 2006 at 3:31 pm
The problem is not really running out of oil. At Peak Oil, you still have 50% of oil available. The question is at what price? I believe that there will be big changes ahead . And unfortunately, it’s either peak oil or global warming that will catch up to mankind. Between the two, I will choose peak oil everytime. Global warming is directly caused by usage of oil & other hydrocarbon fuels, but has an even bigger long term consequences for the entire Earth as a whole. And all of the scientists are warning us RIGHT NOW. There goes your answer from scientists.
The biggest problem is that we are too complacent about present situations. Without any real actions taken, nature will catch up on us sooner or later.
February 26th, 2007 at 8:52 am
frantically trying to making up any amount of shortfall in their oil production.
make?
November 7th, 2007 at 9:30 am
We are in trouble. Get informed!! Read recent studies re Peak Oil: http://relocalize.net/energy_watch_group_issues_major_oil_report
http://www.peakoilwhen.org/Report_oct07.pdf
Set up a Google Alert for Peak Oil
Read at: www.energybulletin.net; www.theoildrum.com; www.aspo-usa.com
Sock away some gold/silver. The US dollar is going into the dumper.
Even our military forces (oil protection forces) are getting concerned about energy supplies…a very bad sign.
January 13th, 2008 at 10:02 pm
Peak oil, yes.
Global warming, no.
Yes, I’ve read all that stuff about peak oil. It rings true, but the technology for alternative energy is here. It is just suppressed by the evil, greedy oil companies. In oil company grant reliant colleges, they teach that perpetual motion machines are impossible due to the law of conservation of energy. However, this law assumes that the universe is a fixed size gas tank of energy. However, the Hubble space telescope proves that the universe is expanding. This means the gas tank is getting bigger. As a matter of fact, you are sitting on top of a perpetual motion machine right now, the Earth. The earth revolves around the sun using an oscillating magnetic-electric-gravitational field that interacts with the sun in the sea of energy that is the universe. Inventors have invented and re-invented the perpetual motion machine, but this technology has been suppressed by the multibillion dollar greed that is the auto-millitary-oil-industrial complex. A couple of years ago, a Nevada or Arizona congresswoman had a petition going that sought the release of the classified energy patents that were classified due to (supposedly) national security reasons. Whatever became of her? I couldn’t find her in my google searches.
In order for the magnet-gravity-electric oscillation motor to benefit mankind and prevent peak oil catastrophes, some selfless soul has to present the world with the technology without financial benefit by not seeking a patent. The bible says that money is the root of all evil. This is why money is evil. There is no profit in saving humanity, so nobody does this.
Global warming, however, is liberal bunk. Read any geology text and it will tell you that the earth goes through natural heating and cooling cycles. As a matter of fact, Greenland is called that because it used to be really green, not full of glaciers like it is now. I invite you to read about the “Little Ice Age”. There was global cooling and an impending ice age until man used fossil fuels and caused a reversal of the cooling process. Industrialization ended the “Little Ice Age.” The earth is just going back in time to the days when Greenland was really green. Global warming is humanity’s savior from another ice age, not the monster the liberal technocrats want you to believe it is. If it weren’t for peak oil and the national security risk of dependence on foreign oil, I’d say, burn more fossil fuels to bring on more global warming! Hooray for global warming!
Live long and prosper,
TK.
March 2nd, 2008 at 2:54 am
Oil will never go below $85 again. In 2010 oil will be over $250 a barrel and gas will be $10 a gallon. Even though reserves are rising which should make oil prices drop the fact they don’t drop in price is because the political tensions are rising. With that you will either buy a hybrid which will still be expensive to operate or ride your bike or take the public transit. There are ways to reduce your fuel cost.
March 2nd, 2008 at 9:21 pm
Alternative energy, conservation and efficiency investments, thousands of them will have to be make to keep our ship afloat, in addition to major life style changes (forget what the Decider and shout radio commentators say, they are clueless).
For a sense of what how special oil is in relation to renewables, study the piece on renewables in the IEEE Spectrum magazine of 1/07. It is viewable at:
Joules, BTUs, Quads—Let’s Call the Whole Thing Off [Oil vs renewables comparison]
http://www.spectrum.ieee.org/jan07/4820
The energy in a 42 gallon barrel of crude oil is roughly equal to 40 hour weeks of human labor for 12 years. We are going to miss it as it disappears. You pay more for bottled water at the gas station than you do for $3 a gallon gasoline.
March 2nd, 2008 at 9:21 pm
Alternative energy, conservation and efficiency investments, thousands of them will have to be make to keep our ship afloat, in addition to major life style changes (forget what the Decider and shout radio commentators say, they are clueless).
For a sense of what how special oil is in relation to renewables, study the piece on renewables in the IEEE Spectrum magazine of 1/07. It is viewable at:
Joules, BTUs, Quads—Let’s Call the Whole Thing Off [Oil vs renewables comparison]
http://www.spectrum.ieee.org/jan07/4820
The energy in a 42 gallon barrel of crude oil is roughly equal to 40 hour weeks of human labor for 12 years. We are going to miss it as it disappears. You pay more for bottled water at the gas station than you do for $3 a gallon gasoline.
May 13th, 2008 at 3:54 am
At some point, the market will correct this. People will cut consumption (we already have, this year, as a nation) as prices rise — therefore, demand will go down. If Congress will ever get off it’s collective lazy butt and DO SOMETHING, specifically: allow us to drill our decades-worth of untapped reserves, supply will go up. Additionally, at current prices, it makes many oil sources that were considered unprofitable to recover in the past, now profitable. I don’t see it going up forever (although I have no idea when that peak will be, I can tell you it won’t be as high as we think.). And by the time we *actually* run out of oil (about 200 years from now), there will be new technologies.
Otherwise, we’re all screwed. But that’s the trap I always see in doomsday predictions: they take current trends and extrapolate THOSE things for the next umpteen years; they generally fail to take into account the fact that markets adjust.