Classification

See also: Benchmark (crude oil)

A sample of medium heavy crude oil

The petroleum industry generally classifies crude oil by the geographic location it is produced in
(e.g. West Texas Intermediate, Brent, or Oman), its API gravity (an oil industry measure of
density), and by its sulfur content. Crude oil may be considered light if it has low density or
heavy if it has high density; and it may be referred to as sweet if it contains relatively little sulfur
or sour if it contains substantial amounts of sulfur.

The geographic location is important because it affects transportation costs to the refinery.
Light crude oil is more desirable than heavy oil since it produces a higher yield of gasoline,
while sweet oil commands a higher price than sour oil because it has fewer environmental
problems and requires less refining to meet sulfur standards imposed on fuels in
consuming countries. Each crude oil has unique molecular characteristics which are understood
by the use of crude oil assay analysis in petroleum laboratories.

Barrels from an area in which the crude oil's molecular characteristics have been determined and
the oil has been classified are used as pricing references throughout the world. Some of the
common reference crudes are:

 West Texas Intermediate (WTI), a very high-quality, sweet, light oil delivered at
Cushing, Oklahoma for North American oil
 Brent Blend, comprising 15 oils from fields in the Brent and Ninian systems in the East
Shetland Basin of the North Sea. The oil is landed at Sullom Voe terminal in the
 Shetlands. Oil production from Europe, Africa and Middle Eastern oil flowing West
tends to be priced off this oil, which forms a benchmark
 Dubai-Oman, used as benchmark for Middle East sour crude oil flowing to the Asia-
Pacific region
 Tapis (from Malaysia, used as a reference for light Far East oil)
 Minas (from Indonesia, used as a reference for heavy Far East oil)
 The OPEC Reference Basket, a weighted average of oil blends from various OPEC (The
Organization of the Petroleum Exporting Countries) countries

There are declining amounts of these benchmark oils being produced each year, so other oils are
more commonly what is actually delivered. While the reference price may be for West Texas
Intermediate delivered at Cushing, the actual oil being traded may be a discounted Canadian
heavy oil delivered at Hardisty, Alberta, and for a Brent Blend delivered at the Shetlands, it may
be a Russian Export Blend delivered at the port of Primorsk.[22]

Petroleum industry

New York Mercantile Exchange prices for West Texas Intermediate 1996–2009
Main article: Petroleum industry
The petroleum industry is involved in the global processes of exploration, extraction, refining,
transporting (often with oil tankers and pipelines), and marketing petroleum products. The
largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also
the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers,
pesticides, and plastics. The industry is usually divided into three major components: upstream,
midstream and downstream. Midstream operations are usually included in the downstream
category.

Petroleum is vital to many industries, and is of importance to the maintenance of industrialized

civilization itself, and thus is critical concern to many nations. Oil accounts for a large
percentage of the world's energy consumption, ranging from a low of 32% for Europe and Asia,
up to a high of 53% for the Middle East. Other geographic regions' consumption patterns are as
follows: South and Central America (44%), Africa (41%), and North America (40%). The world
at large consumes 30 billion barrels (4.8 km³) of oil per year, and the top oil consumers largely
consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States
alone [23], though by 2007 this had dropped to 21% of world oil consumed.[24]

In the US, in the states of Arizona, California, Hawaii, Nevada, Oregon and Washington, the
Western States Petroleum Association (WSPA) represents companies responsible for producing,
distributing, refining, transporting and marketing petroleum. This non-profit trade association
was founded in 1907, and is the oldest petroleum trade association in the United States.[25]

[edit] History
Main article: History of petroleum

Oil derrick in Okemah, Oklahoma, 1922.

Petroleum, in one form or another, has been used since ancient times, and is now important
across society, including in economy, politics and technology. The rise in importance was mostly
due to the invention of the internal combustion engine and the rise in commercial aviation

More than 4000 years ago, according to Herodotus and Diodorus Siculus, asphalt was used in the
construction of the walls and towers of Babylon; there were oil pits near Ardericca (near
Babylon), and a pitch spring on Zacynthus.[26] Great quantities of it were found on the banks of
the river Issus, one of the tributaries of the Euphrates. Ancient Persian tablets indicate the
medicinal and lighting uses of petroleum in the upper levels of their society.

In the 1850s, the process to distill kerosene from petroleum was invented by Abraham Gesner,
providing a cheaper alternative to whale oil. The demand for the petroleum as a fuel for lighting
in North America and around the world quickly grew.[27] The world's first commercial oil well
was drilled in Poland in 1853 [28] Oil exploration developed in many parts of the world with the
Russian Empire, particularly the Branobel company in Azerbaijan, taking the lead in production
by the end of the 19th century.[29] Oil exploration in North America during the early 20th century
later led to the U.S. becoming the leading producer by the mid 1900s. As petroleum production
in the U.S. peaked during the 1960s, however, Saudi Arabia and Russia surpassed the U.S.

Today, about 90% of vehicular fuel needs are met by oil. Petroleum also makes up 40% of total
energy consumption in the United States, but is responsible for only 2% of electricity generation.
Petroleum's worth as a portable, dense energy source powering the vast majority of
vehicles and as the base of many industrial chemicals makes it one of the world's most
important commodities.

The top three oil producing countries are Saudi Arabia, Russia, and the United States.[30]
About 80% of the world's readily accessible reserves are located in the Middle East, with
62.5% coming from the Arab 5: Saudi Arabia, UAE, Iraq, Qatar and Kuwait. A large
portion of the world's total oil exists as unconventional sources, such as bitumen in Canada and
Venezuela and oil shale. While significant volumes of oil are extracted from oil sands,
particularly in Canada, logistical and technical hurdles remain, and Canada's oil sands are not
expected to provide more than a few million barrels per day in the foreseeable future.

Price
Main article: Price of petroleum

After the collapse of the OPEC-administered pricing system in 1985, and a short lived
experiment with netback pricing, oil-exporting countries adopted a market-linked pricing
mechanism.[31] First adopted by PEMEX in 1986, market-linked pricing was widely accepted,
and by 1988 became and still is the main method for pricing crude oil in international trade.[31]
The current references, or pricing markers, are Brent, WTI, and Dubai/Oman.[31]
Uses
Further information: Petroleum products

The chemical structure of petroleum is heterogeneous, composed of hydrocarbon chains of

different lengths. Because of this, petroleum may be taken to oil refineries and the hydrocarbon
chemicals separated by distillation and treated by other chemical processes, to be used for a
variety of purposes. See Petroleum products.

[edit] Fuels

The most common distillations of petroleum are fuels. Fuels include:

 Ethane and other short-chain alkanes

 Diesel fuel (petro diesel)
 Fuel oils
 Gasoline (Petrol)
 Jet fuel
 Kerosene
 Liquefied petroleum gas (LPG)

Other derivatives

Certain types of resultant hydrocarbons may be mixed with other non-hydrocarbons, to create
other end products:

 Alkenes (olefins) which can be manufactured into plastics or other compounds

 Lubricants (produces light machine oils, motor oils, and greases, adding viscosity
stabilizers as required).
 Wax, used in the packaging of frozen foods, among others.
 Sulfur or Sulfuric acid. These are a useful industrial materials. Sulfuric acid is usually
prepared as the acid precursor oleum, a byproduct of sulfur removal from fuels.
 Bulk tar.
 Asphalt
 Petroleum coke, used in speciality carbon products or as solid fuel.
 Paraffin wax
 Aromatic petrochemicals to be used as precursors in other chemical production
This table orders the amount of petroleum consumed in 2008 in thousand barrels (bbl) per day
and in thousand cubic metres (m3) per day:[32][33][34]

Consuming Nation (1000 bbl/day) (1000 m3/day) population in bbl/year per

2008 millions capita
United States 1 19,497.95 3,099.9 314 22.6
China 7,831.00 1,245.0 1345 2.1
2
Japan 4,784.85 760.7 127 13.7
2
India 2,962.00 470.9 1198 0.9
1
Russia 2,916.00 463.6 140 7.6
2
Germany 2,569.28 408.5 82 11.4
Brazil 2,485.00 395.1 193 4.7
Saudi Arabia (OPEC) 2,376.00 377.8 25 33.7
Canada 2,261.36 359.5 33 24.6
2
South Korea 2,174.91 345.8 48 16.4
1
Mexico 2,128.46 338.4 109 7.1
2
France 1,986.26 315.8 62 11.6
Iran (OPEC) 1,741.00 276.8 74 8.6
1
United Kingdom 1,709.66 271.8 61 10.1
2
Italy 1,639.01 260.6 60 10

Source: US Energy Information Administration

Production
In petroleum industry parlance, production refers to the quantity of crude extracted from
reserves, not the literal creation of the product.

# Producing Nation 103bbl/d (2006) 103bbl/d (2007) 103bbl/d (2008)

1 Saudi Arabia (OPEC) 10,665 10,234 10,782
1
2 Russia 9,677 9,876 9,789
1
3 United States 8,331 8,481 8,514
4 Iran (OPEC) 4,148 4,043 4,174
5 China 3,845 3,901 3,973
2
6 Canada 3,288 3,358 3,350
1
7 Mexico 3,707 3,501 3,185
8 United Arab Emirates (OPEC) 2,945 2,948 3,046
9 Kuwait (OPEC) 2,675 2,613 2,742
1
10 Venezuela (OPEC) 2,803 2,667 2,643
 11 Norway 1 2,786 2,565 2,466
12 Brazil 2,166 2,279 2,401
13 Iraq (OPEC) 3 2,008 2,094 2,385
14 Algeria (OPEC) 2,122 2,173 2,179
15 Nigeria (OPEC) 2,443 2,352 2,169
16 Angola (OPEC) 1,435 1,769 2,014
17 Libya (OPEC) 1,809 1,845 1,875
18 United Kingdom 1,689 1,690 1,584
19 Kazakhstan 1,388 1,445 1,429
20 Qatar (OPEC) 1,141 1,136 1,207
21 Indonesia 1,102 1,044 1,051
22 India 854 881 884
23 Azerbaijan 648 850 875
24 Argentina 802 791 792
25 Oman 743 714 761
26 Malaysia 729 703 727
27 Egypt 667 664 631
28 Colombia 544 543 601
29 Australia 552 595 586
30 Ecuador (OPEC) 536 512 505
31 Sudan 380 466 480
32 Syria 449 446 426
33 Equatorial Guinea 386 400 359
34 Thailand 334 349 361
35 Vietnam 362 352 314
36 Yemen 377 361 300
37 Denmark 344 314 289
38 Gabon 237 244 248
39 South Africa 204 199 195
40 Turkmenistan NO DATA 180 189

Source: U.S. Energy Information Administration

Oil exports by country

In order of net exports in 2006 in thousand bbl/d and thousand m³/d:

# Exporting Nation (2006) (103bbl/d) (103m3/d)

1 Canada (OPEC) 8,651 1,376
 2 Saudi Arabia 1 6,565 1,044
3 Russia 1 2,542 404
4 Norway (OPEC) 2,519 401
5 United Arab Emirates (OPEC) 2,515 400
6 Venezuela (OPEC) 1 2,203 350
7 Kuwait (OPEC) 2,150 342
8 Nigeria (OPEC) 2,146 341
9 Algeria (OPEC) 1 1,847 297
10 Mexico 1 1,676 266
11 Libya (OPEC) 1 1,525 242
12 Iraq (OPEC) 1,438 229
13 Angola (OPEC) 1,363 217
14 Kazakhstan 1,114 177
15 Mexico 2 1,071 170

Import

Oil imports by country

In order of net imports in 2006 in thousand bbl/d and thousand m³/d:

# Importing Nation (2006) (103bbl/day) (103m3/day)

1 United States 1 12,220 1,943
2 Japan 5,097 810
3 China 2 3,438 547
4 Germany 2,483 395
5 South Korea 2,150 342
6 France 1,893 301
7 India 1,687 268
8 Italy 1,558 248
9 Spain 1,555 247
10 Republic of China (Taiwan) 942 150
11 Netherlands 936 149
12 Singapore 787 125
13 Thailand 606 96
14 Turkey 576 92
15 Belgium 546 87

Non-producing consumers

Countries whose oil production is 10% or less of their consumption.

# Consuming Nation (bbl/day) (m³/day)

1 Japan 5,578,000 886,831
 2 Germany 2,677,000 425,609
3 South Korea 2,061,000 327,673
4 France 2,060,000 327,514
5 Italy 1,874,000 297,942
6 Spain 1,537,000 244,363
7 Netherlands 946,700 150,513

Environmental effects

Diesel fuel spill on a road

Main article: Environmental issues with petroleum

The presence of oil has significant social and environmental impacts, from accidents and routine
activities such as seismic exploration, drilling, and generation of polluting wastes, greenhouse
gases and climate change not produced by renewable energy.

Extraction

Oil extraction is costly and sometimes environmentally damaging, although Dr. John Hunt of the
Woods Hole Oceanographic Institution pointed out in a 1981 paper that over 70% of the reserves
in the world are associated with visible macroseepages, and many oil fields are found due to
natural seeps. Offshore exploration and extraction of oil disturbs the surrounding marine
environment.[37]

Oil spills

Volunteers cleaning up the aftermath of the Prestige oil spill

Main article: Oil spill

Crude oil and refined fuel spills from tanker ship accidents have damaged natural ecosystems in
Alaska, the Galapagos Islands, France and many other places.

The quantity of oil spilled during accidents has ranged from a few hundred tons to several
hundred thousand tons (e.g., Atlantic Empress, Amoco Cadiz). Smaller spills have already
proven to have a great impact on ecosystems, such as the Exxon Valdez oil spill

Oil spills at sea are generally much more damaging than those on land, since they can spread for
hundreds of nautical miles in a thin oil slick which can cover beaches with a thin coating of oil.
This can kill sea birds, mammals, shellfish and other organisms it coats. Oil spills on land are
more readily containable if a makeshift earth dam can be rapidly bulldozed around the spill site
before most of the oil escapes, and land animals can avoid the oil more easily.

Control of oil spills is difficult, requires ad hoc methods, and often a large amount of manpower.
The dropping of bombs and incendiary devices from aircraft on the Torrey Canyon wreck
produced poor results;[38] modern techniques would include pumping the oil from the wreck, like
in the Prestige oil spill or the Erika oil spill.[39]

[edit] Whales

James S. Robbins has argued that the advent of petroleum-refined kerosene saved some species
of great whales from extinction by providing an inexpensive substitute for whale oil, thus
eliminating the economic imperative for open-boat whaling.[40]

[edit] Alternatives to petroleum

Further information: Renewable energy

In the United States in 2007 about 70% of petroleum was used for transportation (e.g. gasoline,
diesel, jet fuel), 24% by industry (e.g. production of plastics), 5% for residential and commercial
uses, and 2% for electricity production.[41] Outside of the US, a higher proportion of petroleum
tends to be used for electricity.[42]

Alternatives to petroleum-based vehicle fuels

Main articles: Alternative propulsion, Biofuel, and Hydrogen economy

Alternative propulsion refers to both:

 Alternative fuels used in standard or modified internal combustion engines (i.e. biofuels
or combustion hydrogen).
 propulsion systems not based on internal combustion, such as those based on electricity
(for example, all-electric or hybrid vehicles), compressed air, or fuel cells (i.e. hydrogen
fuel cells).

Currently, cars can be classified into the following groups:

 Internal combustion engine cars, which may use

o gasoline, fuel and/or biofuels (e.g. alcohol, biodiesel and biobutanol)
o compressed natural gas used by natural gas vehicles
o hydrogen in hydrogen vehicles.

 Advanced technology cars such as hybrid vehicles which use petroleum and/or biofuels,
albeit far more efficiently.[43]
  Plug-in hybrids, that can store and use externally produced electricity in addition to
petroleum.
 electric cars

Alternatives to using oil in industry

Please help improve this article by expanding it. Further information might be found on the
talk page. (July 2008)

Biological feedstocks do exist for industrial uses such as plastic production.[44]

Alternatives to burning petroleum for electricity

Main articles: Alternative energy, Nuclear power, and Renewable energy

In oil producing countries with little refinery capacity, oil is sometimes burned to produce
electricity. Renewable energy technologies such as solar power, wind power, micro hydro,
biomass and biofuels might someday be used to replace some of these generators, but today the
primary alternatives remain large scale hydroelectricity, nuclear and coal-fired generation.

Future of petroleum production

Consumption in the twentieth century has been abundantly pushed by automobile growth; the
1985-2003 oil glut even fuelled the sales of low economy vehicles (SUVs) in OECD countries.
In 2008, the economic crisis seems to have some impact on the sales of such vehicles; still, the
2008 oil consumption shows a small increase. The BRIC countries might also kick in, as China
briefly was the first automobile market in December 2009[45]. The immediate outlook still hints
upwards. In the long term, uncertainties linger; the OPEC believes that the OECD countries will
push low consumption policies at some point in the future; when that happens, it will definitely
curb the oil sales, and both OPEC and EIA kept lowering their 2020 consumption estimates
during the past 5 years [46]. Oil products are more and more in competition with alternative
sources, mainly coal and natural gas, both cheaper sources.

Production will also face an increasingly complex situation; while OPEC countries still have
large reserves at low production prices, newly found reservoirs often lead to higher prices;
offshore giants such as Tupi, Guara and Tiber demand high investments and ever-increasing
technological abilities. Subsalt reservoirs such as Tupi were unknown in the twentieth century,
mainly because the industry was unable to probe them. Enhanced Oil Recovery (EOR)
techniques (example: DaQing, China [47] ) will continue to play a major role in increasing the
world's recoverable oil.
[edit] Hubbert peak theory

Main articles: Peak oil and Hubbert peak theory

The Hubbert peak theory (also known as peak oil) posits that future petroleum production
(whether for individual oil wells, entire oil fields, whole countries, or worldwide production) will
eventually peak and then decline at a similar rate to the rate of increase before the peak as these
reserves are exhausted. The peak of oil discoveries was in 1965, and oil production per year has
surpassed oil discoveries every year since 1980.[48]

Controversy surrounds predictions of the timing of the global peak, as these predictions are
dependent on the past production and discovery data used in the calculation as well as how
unconventional reserves are considered[citation needed]. Also, these predictions do not take into
account outside elements such as the current economic crisis (2008)[citation needed]. Also, many Peak
Oil promoters proposed many different dates, some of them passed already[citation needed]. Despite
these uncertainties, Hubbert applied his theory to predict the peak of U.S. oil production at a date
between 1966 and 1970. This prediction was based on data available at the time of his
publication in 1956. In the same paper, Hubbert predicts the world Peak Oil for the year 2000.[49]

It is difficult to predict the oil peak in any given region, due to the lack of knowledge and/or
transparency in accounting of global oil reserves.[50] Based on available production data,
proponents have previously predicted the peak for the world to be in years 1989, 1995, or 1995-
2000. Some of these predictions date from before the recession of the early 1980s, and the
consequent reduction in global consumption, the effect of which was to delay the date of any
peak by several years. Just as the 1971 U.S. peak in oil production was only clearly recognized
after the fact, a peak in world production will be difficult to discern until production clearly
drops off.

Peak oil

From Wikipedia, the free encyclopedia

Jump to: navigation, search

For information on the timing of peak oil, see Predicting the timing of peak oil.

Further information: Oil depletion

A logistic distribution shaped production curve, as originally suggested by M. King Hubbert in 1956.

Peak oil depletion scenarios graph, which depicts cumulative published depletion studies by the ASPO
and other depletion analysts

Peak oil is the point in time when the maximum rate of global petroleum extraction is reached,
after which the rate of production enters terminal decline. The concept is based on the observed
production rates of individual oil wells, and the combined production rate of a field of related oil
wells. The aggregate production rate from an oil field 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, 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; peak oil is the point of maximum
production while depletion refers to a period of falling reserves and supply.

M. King Hubbert 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.[1] His logistic model, now
called Hubbert peak theory, and its variants have described with reasonable accuracy the peak
and decline of production from oil wells, fields, regions, and countries,[2] 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. Various modified versions of his original logistic model are
used, using more complex functions to allow for real world factors. While each version is
applied to a specific domain, the central features of the Hubbert curve (that production stops
rising and then declines) remain unchanged, albeit with different profiles.

Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew
Simmons, believe the high dependence of most modern industrial transport, agricultural, and
industrial systems on the relative low cost and high availability of oil will cause the post-peak
production decline and possible severe increases in the price of oil to have negative implications
for the global economy. Predictions vary greatly as to what exactly these negative effects would
be. If political and economic changes only occur in reaction to high prices and shortages rather
than in reaction to the threat of a peak, then the degree of economic damage to importing
countries will largely depend on how rapidly oil imports decline post-peak. According to the
Export Land Model, oil exports drop much more quickly than production drops due to domestic
consumption increases in exporting countries. Supply shortfalls would cause the price of oil to
increase sharply, unless demand is mitigated with planned conservation measures and use of
alternatives.[3]

Optimistic estimations of peak production forecast the global decline will begin by 2020 or later,
and assume major investments in alternatives will occur before a crisis, without requiring major
changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at
first escalating and then retreating as other types of fuel and energy sources are used.[4]
Pessimistic predictions of future oil production operate on the thesis that either the peak has
already occurred,[5][6][7][8] that oil production is on the cusp of the peak, or that it will occur
shortly.[9][10] As proactive mitigation may no longer be an option, a global depression is predicted,
perhaps even initiating a chain reaction of the various feedback mechanisms in the global market
that might stimulate a collapse of global industrial civilization, potentially leading to large
population declines within a short period. 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.[11]
Demand for oil
Petroleum: top consuming nations, 1960-2006

Further information: Oil consumption rates, Industrialization, and Developing countries

The world increased its daily oil consumption from 63 million barrels (Mbbl) in 1980 to 85 million barrels
in 2006

The demand 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. World demand for oil is projected to increase 37% over 2006 levels
by 2030 (118 million barrels per day (18.8×106 m3/d) from 86 million barrels (13.7×106 m3)), due
in large part to increases in demand from the transportation sector.[12][13] A study published in the
journal Energy Policy predicted demand would surpass supply by 2015 (unless constrained by
strong recession pressures caused by reduced supply).[10]

Energy demand is distributed amongst four broad sectors: transportation, residential,

commercial, and industrial.[14][15] 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 engines.[16] This
sector also has the highest consumption rates, accounting for approximately 68.9% of the oil
used in the United States in 2006,[17] and 55% of oil use worldwide as documented in the Hirsch
report. 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,[18] the United States is the world's
largest consumer of petroleum. Between 1995 and 2005, U.S. consumption grew from 17.7
million barrels a day to 20.7 million barrels a day, a 3 million barrel a day increase. China, by
comparison, increased consumption from 3.4 million barrels a day to 7 million barrels a day, an
increase of 3.6 million barrels a day, in the same time frame.[19]

United States oil production peaked in 1970. By 2005 imports were twice the production.
As countries develop, industry, rapid urbanization, and higher living standards drive up energy
use, most often of oil. Thriving economies such as China and India are quickly becoming large
oil consumers.[20] China has seen oil consumption grow by 8% yearly since 2002, doubling from
1996-2006.[18] 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 5 years in a row.[21] Although swift
continued growth in China is often predicted, others predict that China's export dominated
economy will not continue such growth trends due to wage and price inflation and reduced
demand from the United States.[22] India's oil imports are expected to more than triple from 2005
levels by 2020, rising to 5 million barrels per day (790×103 m3/d).[23]

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.[24]

The Energy Information Administration (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.[25]

The IEA now expects global oil demand to increase by about 1.6 million barrels a day in 2010.
Asian economies, in particular China, will lead the increase.[26] China’s oil demand may rise
more than 5% compared with a 3.7% gain in 2009, the CNPC said.[27]

[edit] Population

World population
Another significant factor on petroleum demand has been human population growth. Oil
production per capita peaked in the 1970s.[28] The United States Census Bureau predicts that the
world population in 2030 will be almost double that of 1980.[29] 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.[30][31] Physicist Albert Bartlett claims that the rate of oil
production per capita is falling, and that the decline has gone undiscussed because a politically
incorrect form of population control may be implied by mitigation.[32] Oil production per capita
has declined from 5.26 barrels per year (0.836 m3/a) in 1980 to 4.44 barrels per year (0.706 m3/a)
in 1993,[29][33] but then increased to 4.79 barrels per year (0.762 m3/a) in 2005.[29][33] In 2006, the
world oil production took a downturn from 84.631 to 84.597 million barrels per day
(13.4553×106 to 13.4498×106 m3/d) although population has continued to increase. This has
caused the oil production per capita to drop again to 4.73 barrels per year (0.752 m3/a).[29][33]

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, although this is offset to a degree by
increasing average longevity in developed nations. In 1970, the population grew at 2.1%. By
2007, the growth rate had declined to 1.167%.[34] However, oil production is 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,[29] whereas according to BP, global oil production during that same period
increased from 74.9 to 81.1 million barrels (11.91×106 to 12.89×106 m3), or by 8.2%.[35] or
according to EIA, from 77.762 to 84.631 million barrels (12.3632×106 to 13.4553×106 m3), or by
8.8%.[33]

[edit] Agricultural effects and population limits

Further information: Food vs fuel, 2007–2008 world food price crisis, Energy and agriculture, and Food
security

Because 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 in the coming decades.[36][note
1]
Geologist Dale Allen Pfeiffer contends that current population levels are unsustainable, and
that to achieve a sustainable economy and avert disaster the United States population would have
to be reduced by at least one-third, and world population by two-thirds.[37] The largest consumer
of fossil fuels in modern agriculture is ammonia production (for fertilizer) via the Haber process,
which is essential to high-yielding intensive agriculture. The specific fossil fuel input to fertilizer
production is primarily natural gas, to provide hydrogen via steam reforming. Given sufficient
supplies of renewable electricity, hydrogen can be generated without fossil fuels using methods
such as electrolysis. For example, the Vemork hydroelectric plant in Norway used its surplus
electricity output to generate renewable ammonia from 1911 to 1971.[38] Iceland currently
generates ammonia using the electrical output from its hydroelectric and geothermal power
plants, because Iceland has those resources in abundance while having no domestic hydrocarbon
resources, and a high cost for importing natural gas.[39] However, in the near term, almost every
large-scale source of renewable energy still requires petroleum inputs, such as to fuel
construction equipment and to transport workers and materials. Iceland, for example, has
abundant renewable energy resources, but still depends critically on liquid fuels from petroleum,
[citation needed]
all of which it must import. If the supply of petroleum should fall faster than people
 can learn how to build renewable energy infrastructure using only renewable inputs, it may not
be possible to maintain the intensive agriculture necessary to support the high global population.

[edit] Petroleum supply

[edit] Discoveries

All the easy oil and gas in the world has pretty much been found. Now comes the harder
“ work in finding and producing oil from more challenging environments and work areas.
”
  — William J. Cummings, Exxon-Mobil company spokesman, December 2005 [40]

It is pretty clear that there is not much chance of finding any significant quantity of new
“ cheap oil. Any new or unconventional oil is going to be expensive.
”
  — Lord Ron Oxburgh, a former chairman of Shell, October 2008 [41]

To pump oil, it first needs to be discovered. The peak of world oilfield discoveries occurred in
1965[42] at around 55 billion barrels(Gb)/year.[43] According to the Association for the Study of
Peak Oil and Gas (ASPO), the rate of discovery has been falling steadily since. Less than 10
Gb/yr of oil were discovered each year between 2002-2007.[44]

Reserves

Main articles: Oil reserves and List of largest oil fields

2004 U.S. government predictions for oil production other than in OPEC and the former Soviet Union

Total possible conventional crude oil reserves include all crude oil with 90-95% certainty of
being technically possible to produce (from reservoirs through a well boreusing 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%).[45] This does not include liquids extracted from mined solids or gasses (oil
sands, oil shales, gas-to-liquid processes, or coal-to-liquid processes).[46] 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. [6][10] 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.[6]

Current technology is capable of extracting about 40% of the oil from most wells. Some
speculate that future technology will make further extraction possible,[47][verification needed] 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.[40] Recent price
increases have led to oil exploration 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 rigs, increases in steel prices, and overall increases
in costs due to complexity.[48][49]

[edit] Concerns over stated reserves

[World] reserves are confused and in fact inflated. Many of the so-called reserves are in
“ fact resources. They're not delineated, they're not accessible, they’re not available for
production.
”
— Sadad I. Al Husseini, former VP of Aramco, presentation to the Oil and Money conference,
 
October 2007.[7]

Al-Husseini's estimated that 300 billion (64×109 m3) of the world's 1,200 billion barrels

(190×109 m3) of proved reserves should be recategorized as speculative resources.[7]
Graph of OPEC reported reserves showing refutable jumps in stated reserves without associated
discoveries, as well as the lack of depletion despite yearly production.

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.[50][51] This was best exemplified by the 2004 scandal surrounding the
'evaporation' of 20% of Shell's reserves.[52]

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;
and governments of consumer countries may seek a means to foster sentiments of security and
stability within their economies and among consumers.

The Energy Watch Group (EWG) 2007 report shows total world Proved (P95) plus Probable
(P50) reserves to be between 854 and 1,255 Gb (30 to 40 years of supply if demand growth were
to stop immediately). Major discrepancies arise from accuracy issues with OPEC'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. 1,255 Gb is therefore a best-case
scenario.[6] 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.[47]

Kuwait, for example, was reported by a January 2006 issue of Petroleum Intelligence Weekly to
have only 48 Gb in reserve, of which only 24 were "fully proven." This report was based on
"leaks of confidential documents" from Kuwait, and has not been formally denied by the Kuwaiti
authorities. This leaked document dates back from 2001[53] so the figure includes oil that have
been produced since 2001, roughly 5-6 billion barrels,[19] but excludes revisions or discoveries
made since then. Additionally, the reported 1.5 Gb of oil burned off by Iraqi soldiers in the First
Persian Gulf War[54] are conspicuously missing from Kuwait's figures.

On the other hand investigative journalist Greg Palast argued in 2006 that oil companies have an
interest in making oil look more rare than it is, to justify higher prices.[55][dead link][unreliable source?] Other
analysts in 2003 argued that oil producing countries understated the extent of their reserves to
drive up the price.[56]

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.[57] In 2005, the IEA predicted that 2030 production rates would reach 120Mb/d, but this
number was gradually reduced to 105 million. The IEA official alleged industry insiders agree
that even 90 to 95Mb/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.[57] A
2008 analysis of IEA predictions questioned several underlying assumptions and claimed that a
2030 production level of 75Mb/d (including 55Mb of crude oil and 20Mb non-conventional oil
and NGLs) was more realistic than the IEA numbers.[8]

[edit] Unconventional sources

Main articles: Unconventional oil, Heavy crude oil, Oil sands, and Oil shale

Syncrude's Mildred Lake mine site and plant near Fort McMurray, Alberta

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,[58] oil companies can now book them as
proven reserves after opening a strip mine or thermal facility for extraction. 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 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.
[59][60]
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
of Venezuela,[61] the Athabasca Oil Sands in the Western Canadian Sedimentary Basin,[62] and the
oil shales of the Green River Formation in Colorado, Utah, and Wyoming in the United States.[63]
[64]
Energy companies such Syncrude and Suncor have been extracting bitumen for decades but
production has increased greatly in recent years with the development of Steam Assisted Gravity
Drainage and other extraction technologies.[65]

Chuck Masters of the USGS estimates that, "Taken together, these resource occurrences, in the
Western Hemisphere, are approximately equal to the Identified Reserves of conventional crude
oil accredited to the Middle East."[66] 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.[67]
In October 2009, the USGS updated the Orinoco tar sands (Venezuela) recoverable "mean value"
to 513 billion barrels (8.16×1010 m3), with a 90% chance of being within the range of 380-652
billion barrels, making this area "one of the world's largest recoverable oil accumulations".[68]

Unconventional resources are much larger than conventional ones. [69]

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.[70] Another study
claims that even under highly optimistic assumptions, "Canada's oil sands will not prevent peak
oil," although production could reach 5 million bbl/day by 2030 in a "crash program"
development effort.[71] Moreover, oil extracted from these sources typically contains
contaminants such as sulfur and heavy metals that are energy-intensive to extract and can leave
tailings ponds containing hydrocarbon sludge in some cases.[59][72] The same applies to much of
the Middle East's undeveloped conventional oil reserves, much of which is heavy, viscous, and
contaminated with sulfur and metals to the point of being unusable.[73] However, recent high oil
prices make these sources more financially appealing.[47] A study by Wood Mackenzie suggests
that within 15 years all the world’s extra oil supply will likely come from unconventional
sources.[74]

[edit] Synthetic sources

A 2003 article in Discover magazine claimed that thermal depolymerization 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.[75] 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.[76]

A 2007 news bulletin published by Los Alamos Laboratory proposed that hydrogen (possibly
produced using hot fluid from nuclear reactors to split water into hydrogen and oxygen) in
combination with sequestered CO2 could be used to produce methanol, 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 CO2
are unknown.[77]

[edit] Production

Main articles: Petroleum#Means of production and Extraction of petroleum

OPEC Crude Oil Production 2002-2006. Source: Middle East Economic Survey

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 equation.

World wide oil discoveries have been less than annual production since 1980.[6] According to
several sources, worldwide production is past or near its maximum.[5][6][7][9] World population has
grown faster than oil production. Because of this, oil production per capita peaked in 1979
(preceded by a plateau during the period of 1973-1979).[28]

The increasing investment in harder-to-reach oil is a sign of oil companies' belief in the end of
easy oil.[40] 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.[78]

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.
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.[79]

[edit] Worldwide production trends

World oil production growth trends were flat from 2005 to 2008. According to a January 2007
International Energy Agency 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 million barrels per day (13.552×106 m3/d) in 2006, up 0.76 million barrels per day
(121×103 m3/d) (0.9%), from 2005.[80] Average yearly gains in global supply from 1987 to 2005
were 1.2 million barrels per day (190×103 m3/d) (1.7%).[80] 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 through out the
world.[81]
[edit] Oil field decline

Alaska's oil production has declined 65% since peaking in 1988

Of the largest 21 fields, at least 9 are in decline.[82] In April, 2006, a Saudi Aramco spokesman
admitted that its mature fields are now declining at a rate of 8% per year (with a national
composite decline of about 2%).[83] 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.[47][84] The world's second largest oil field, the
Burgan field in Kuwait, entered decline in November 2005.[85]
According to a study of the largest 811 oilfields conducted in early 2008 by Cambridge Energy
Research Associates (CERA), the average rate of field decline is 4.5% per year. The IEA 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.[86] 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 million barrels per day (16×106 m3/d).[87] Kjell
Aleklett of the Association for the Study of Peak Oil and Gas 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.[88] 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 in their World Energy Outlook 2008.[89]

Mexico announced that its giant Cantarell Field entered depletion in March, 2006,[90] due to past
overproduction. In 2000, PEMEX built the largest nitrogen plant in the world in an attempt to
maintain production through nitrogen injection into the formation,[91] but by 2006, Cantarell was
declining at a rate of 13% per year.[92]

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.[93] On November 18, 2007, with oil above $98 a barrel, King Abdullah of Saudi
Arabia, a long-time advocate of stabilized oil prices, announced that his country would not
increase production to lower prices.[94] 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.[47]

Commentators have pointed to the Jack 2 deep water test well in the Gulf of Mexico, announced
5 September 2006,[95] 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.[96] However, even though oil discoveries are expected after the peak oil of production is
reached,[97] the new reserves of oil will be harder to find and extract. The Jack 2 field, for
instance, is more than 20,000 feet (6,100 m) under the sea floor in 7,000 feet (2,100 m) of water,
requiring 8.5 kilometers of pipe to reach. Additionally, even the maximum estimate of 15 billion
barrels (2.4×109 m3) represents slightly less than 2 years of U.S. consumption at present levels.[15]

[edit] 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.

[edit] Nationalization of oil supplies

Main article: Nationalization of oil supplies
Another factor affecting global oil supply is the nationalization 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."[98]

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 companies is difficult. The PFC study implies political
factors are limiting capacity increases in Mexico, Venezuela, Iran, Iraq, Kuwait, and Russia.
Saudi Arabia is also limiting capacity expansion, but because of a self-imposed cap, unlike the
other countries.[99] 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.[100]

[edit] Cartel influence on supply

Further information: Organization of the Petroleum Exporting Countries

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," (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.[101]
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.[102]

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.[56] 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. 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.[103]
Timing of peak oil
Main article: Predicting the timing of peak oil

M. King Hubbert initially predicted in 1974 that peak oil would occur in 1995 "if current trends
continue."[104] However, in the late 1970s and early 1980s, global oil consumption actually
dropped (due to the shift to energy-efficient cars,[105] the shift to electricity and natural gas for
heating,[106] 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.[107] 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, Chairman of Simmons & Company International 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."[108]

[edit] Pessimistic predictions of future oil production

Saudi Arabia's regent Abdullah told his subjects in 1998, "The oil boom is over and will not
return... All of us must get used to a different lifestyle." Since then he has implemented a series
of anti-corruption reforms and government programs intended to lower Saudi Arabia's
dependence on oil revenues. The royal family was put on notice to end its history of excess and
new industries were created to diversify the national economy.[109]

Matthew Simmons said on October 26, 2006 that global oil production may have peaked in
December 2005, though he cautioned that further monitoring of production is required to
determine if a peak has actually occurred.[110] In 2007, Kenneth S. Deffeyes also argued that
world oil production had peaked in December 2005.[5]
2004 U.S. government predictions for oil production other than in OPEC and the former Soviet Union

World Crude Oil Production 1960-2008. Sources: DOE/EIA, IEA

The July 2007 IEA Medium-Term Oil Market Report projected a 2% non-OPEC liquids supply
growth in 2007-2009, reaching 51.0 mb/d in 2008, receding thereafter as the slate of verifiable
investment projects diminishes. They refer to this decline as a plateau. The report expects only a
small amount of supply growth from OPEC producers, with 70% of the increase coming from
Saudi Arabia, the UAE, and Angola as security and investment issues continue to impinge on oil
exports from Iraq, Nigeria and Venezuela.[111]

In October 2007, the Energy Watch Group, a German research group founded by MP Hans-Josef
Fell, released a report claiming that oil production peaked in 2006 and would decline by several
percent annually. The authors predicted negative economic effects and social unrest as a result.[6]
[112]
They stated that the IEA production plateau prediction uses purely economic models, which
rely on an ability to raise production and discovery rates at will.[6]
Sadad Al Husseini, former head of Saudi Aramco's production and exploration, stated in an
October 29, 2007 interview that oil production had likely already reached its peak in 2006,[7] and
that assumptions by the IEA and EIA of production increases by OPEC to over 45 MB/day are
"quite unrealistic."[7] Data from the United States Energy Information Administration show that
world production leveled out in 2004, and an October 2007 retrospective report by the Energy
Watch Group concluded that this data showed the peak of conventional oil production in the
third quarter of 2006.[6]

ASPO predicted in their January 2008 newsletter that the peak in all oil (including non-
conventional sources), would occur in 2010. This is earlier than the July 2007 newsletter
prediction of 2011.[113] ASPO Ireland in its May 2008 newsletter, number 89, revised its
depletion model and advanced the date of the peak of overall liquids from 2010 to 2007.[114]

Texas alternative energy activist and oilman T. Boone Pickens stated in 2005 that worldwide
conventional oil production was very close to peaking.[115] On June 17, 2008, in testimony before
the U.S. Senate Energy and Natural Resources Committee, Pickens stated that "I do believe you
have peaked out at 85 million barrels a day globally."[116]

At least one oil company, French supermajor Total S.A., announced plans in 2008 to shift their
focus to nuclear energy instead of oil and gas. A Total senior vice president explained that this is
because they believe oil production will peak before 2020, and they would like to diversify their
position in the energy markets.[117]

The UK Industry Taskforce on Peak Oil and Energy Security (ITPOES) reported in late October
2008 that peak oil is likely to occur by 2013. ITPOES consists of eight companies: Arup,
FirstGroup, Foster + Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group,
Virgin Group, and Yahoo. Their report includes a chapter written by Shell corporation.[118]

In October 2009, a report published by the Government-supported UK Energy Research Centre,

following 'a review of over 500 studies, analysis of industry databases and comparison of global
supply forecasts', concluded that 'a peak in conventional oil production before 2030 appears
likely and there is a significant risk of a peak before 2020'.[119] The authors believe this forecast to
be valid 'despite the large uncertainties in the available data'.[120] The study was claimed to be the
first to undertake an 'independent, thorough and systematic review of the evidence and
arguments in the 'peak oil’ debate'.[121] The authors noted that 'forecasts that delay a peak in
conventional oil production until after 2030 are at best optimistic and at worst implausible' and
warn of the risk that 'rising oil prices will encourage the rapid development of carbon-intensive
alternatives that will make it difficult or impossible to prevent dangerous climate change[121] and
that 'early investment in low-carbon alternatives to conventional oil is of considerable
importance' in avoiding this scenario.[122]

A 2010 report by Oxford University researchers in the journal Energy Policy predicted that
production would peak before 2015.[10]

[edit] Optimistic predictions of future oil production

Non-'peakists' can be divided into several different categories based on their specific criticism of
peak oil. Some claim that any peak will not come soon or have a dramatic effect on the world
economies. Others claim we will not reach a peak for technological reasons, while still others
claim our oil reserves are quickly regenerated abiotically.

[edit] Plateau oil

Monthly world oil supply data from 1995 to 2008. Supply is defined as crude oil production (including
lease condensates), natural gas plant liquids, other liquids, and refinery processing gains.

CERA, which counts unconventional sources in reserves while discounting EROEI, believes that
global production will eventually follow an “undulating plateau” for one or more decades before
declining slowly.[4] In 2005 the group predicted that "petroleum supplies will be expanding faster
than demand over the next five years."[123]

In 2007, The Wall Street Journal reported that "a growing number of oil-industry chieftains"
believed that oil production would soon reach a ceiling for a variety of reasons, and plateau at
that level for some time. Several chief executives stated that projections of over 100 million
barrels of production per day are unrealistic, contradicting the projections of the International
Energy Agency and United States Energy Information Administration.[124]

In 2008, the IEA predicted a plateau by 2020 and a peak by 2030. The report called for a "global
energy revolution" to prepare mitigations by 2020 and avoid "more difficult days" and large
wealth transfers from OECD nations to oil producing nations.[81] This estimate was changed in
2009 to predict a peak by 2020, with severe supply-growth constraints beginning in 2010
(stemming from "patently unsustainable" energy use and a lack of production investment)
leading to rapidly increasing oil prices and an "oil crunch" before the peak.[125]

It has been noted that even a "plateau oil" scenario may cause socio-political disruption through
extreme petroleum price instability.[126]

[edit] Energy Information Administration and USGS 2000 reports

The United States Energy Information Administration projects (as of 2006) world consumption
of oil to increase to 98.3 million barrels per day (15.63×106 m3/d) in 2015 and 118 million
barrels per day (18.8×106 m3/d) in 2030.[127] This would require a more than 35 percent increase
in world oil production by 2030. A 2004 paper by the Energy Information Administration based
on data collected in 2000 disagrees with Hubbert peak theory on several points. It:[16]

 explicitly incorporates demand into model as well as supply

 does not assume pre/post-peak symmetry of production levels
 models pre- and post-peak production with different functions (exponential growth and
constant reserves-to-production ratio, respectively)
 assumes reserve growth, including via technological advancement and exploitation of small
reservoirs

The EIA estimates of future oil supply are countered by Sadad Al Husseini, a retired Vice
President of Exploration of Aramco, who calls it a 'dangerous over-estimate'.[128] Husseini also
points out that population growth and the emergence of China and India means oil prices are now
going to be structurally higher than they have been.

Colin Campbell argues that the 2000 United States Geological Survey (USGS) estimates is a
methodologically flawed study that has done incalculable damage by misleading international
agencies and governments. Campbell dismisses the notion that the world can seamlessly move to
more difficult and expensive sources of oil and gas when the need arises. He argues that oil is in
profitable abundance or not there at all, due ultimately to the fact that it is a liquid concentrated
by nature in a few places that possess the right geological conditions. Campbell believes OPEC
countries raised their reserves to get higher oil quotas and to avoid internal critique. He also
points out that the USGS failed to extrapolate past discovery trends in the world’s mature basins.
[129]

[edit] No peak oil

The view that oil extraction will never enter a depletion phase is often referred to as
"cornucopian" in ecology and sustainability literature.[130][131][132]

Abdullah S. Jum'ah, President, Director and CEO of Saudi Aramco states that the world has
adequate reserves of conventional and nonconventional oil sources that will last for more than a
century.[133][134] As recently as 2008 he pronounced "We have grossly underestimated mankind’s
ability to find new reserves of petroleum, as well as our capacity to raise recovery rates and tap
fields once thought inaccessible or impossible to produce.” Jum’ah believes that in-place
conventional and non-conventional liquid resources may ultimately total between 13 trillion and
16 trillion barrels and that only a small fraction (1.1 trillion) has been extracted to date.[135]

I do not believe the world has to worry about ‘peak oil’ for a very long time.
“ ”
  — Abdullah S. Jum'ah, 2008-01[135]

Economist Michael Lynch says that the Hubbert Peak theory is flawed and that there is no
imminent peak in oil production. He argued in 2004 that production is determined by demand as
well as geology, and that fluctuations in oil supply are due to political and economic effects as
well as the physical processes of exploration, discovery and production.[136] This idea is echoed
by Jad Mouawad, who explains that as oil prices rise, new extraction technologies become
viable, thus expanding the total recoverable oil reserves. This, according to Mouwad, is one
explanation of the changes in peak production estimates.[137]

Leonardo Maugeri, group senior vice president, Corporate Strategies of Eni S.p.A., dismissed the
peak oil thesis in a 2004 policy position piece in Science as "the current model of oil doomsters,"
and based on several flawed assumptions. He characterizes the peak oil theory as part of a series
of "recurring oil panics" that have "driven Western political circles toward oil imperialism and
attempts to assert direct or indirect control over oil-producing regions". Maugeri claims the
geological structure of the earth has not been explored thoroughly enough to conclude that the
declining trend in discoveries, which began in the 1960s, will continue. He goes on to claim that
complete global oil production, discovery trends, and geological data are not available globally.
[138]

[edit] Possible effects and consequences of peak oil

Further information: Malthusian catastrophe, Olduvai theory, and Backstop resources

The wide use of fossil fuels has been one of the most important stimuli of economic growth and
prosperity since the industrial revolution, 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. If alternatives are not forthcoming, the
products produced with oil (including fertilizers, detergents, solvents, adhesives, and most
plastics) would become scarce and expensive.

[edit] The Hirsch report

Main article: Hirsch report

In 2005, the United States Department of Energy published a report titled Peaking of World Oil
Production: Impacts, Mitigation, & Risk Management.[139] Known as the Hirsch report, 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."

[edit] Conclusions from the Hirsch report and three scenarios

The Hirsch report came to a number of conclusions:

1. World oil peaking is going to happen - some forecasters predict within a decade, others later.
2. Oil peaking could cost economies dearly - particularly that of the U.S.
3. Oil peaking presents a unique challenge - previous transitions were gradual and evolutionary; oil
peaking will be abrupt and revolutionary.
4. The real problem is liquid fuels for transportation - motor vehicles, aircraft, trains, and ships
have no ready alternative.
5. Mitigation efforts will require substantial time - an intense effort over decades.
6. Both supply and demand will require attention - higher efficiency can reduce demand, but large
amounts of substitute fuels must be produced.
7. It is a matter of risk management - early mitigation will be less damaging than delayed
mitigation.
8. Government intervention will be required - otherwise the economic and social implications
would be chaotic.
9. Economic upheaval is not inevitable - without mitigation, peaking will cause major upheaval, but
given enough lead-time, the problems are soluble.
10. More information is needed - effective action requires better understanding of a number of
issues.

The report listed three possible scenarios: waiting until world oil production peaks before taking
crash program action leaves the world with a significant liquid fuel deficit for more than two
decades; initiating a mitigation crash program ten years before world oil peaking helps
considerably but still leaves a liquid fuels shortfall roughly a decade after the time that oil would
have peaked; or initiating a mitigation crash program twenty years before peaking appears to
offer the possibility of avoiding a world liquid fuels shortfall for the forecast period.

[edit] Other predictions

Further information: Malthusian catastrophe

[edit] Export Land Model

The Export Land Model 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.[140] 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 is estimated that by 2010 internal demand will decrease worldwide
exports by 2.5 million barrels per day.[141]

[edit] Transportation and housing

A suburb of Union, Kentucky

A majority of Americans live in suburbs, a type of low-density settlement designed around

universal personal automobile use. Commentators such as James Howard Kunstler 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, 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 "slums of the future."[142][143] 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.[144]

Methods that have been suggested[145] for mitigating these urban and suburban issues include the
use of non-petroleum vehicles such as electric cars, battery electric vehicles, transit-oriented
development, bicycles, new trains, new pedestrianism, smart growth, shared space, urban
consolidation, and New Urbanism.

An extensive 2009 report by the United States National Research Council of the Academy of
Sciences, commissioned by the United States Congress, stated six main findings.[146] 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 CO2 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 CO2 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 made two major
recommendations: first that policies that support compact development (and especially its ability
to reduce driving, energy use, and CO2 emissions) should be encouraged, and second that further
studies should be conducted to make future compact development more effective.

[edit] Mitigation
Main articles: Mitigation of peak oil, Energy conservation, Energy development, and Energy security

To avoid the serious social and economic implications a global decline in oil production could
entail, the Hirsch report emphasized the need to find alternatives at least ten-twenty years before
the peak, and to phase out the use of petroleum over that time,[147] similar to the plan Sweden
announced in 2005. Such mitigation could include energy conservation, fuel substitution, and the
use of unconventional oil. Because mitigation can reduce the consumption of traditional
petroleum sources, it can also affect the timing of peak oil and the shape of the Hubbert curve.

[edit] Positive aspects of peak oil

There are those who believe that peak oil should be viewed as a positive event.[148] Many of these
critics reason that if the price of oil rises high enough, the use of alternative clean fuels could
help control the pollution of fossil fuel use as well as mitigate global warming.[149] Permaculture,
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 culture' are argued to be ethical responses to the acknowledgment of finite fossil
resources.[150]

The "Transition Towns" Movement, started in Ireland and spread internationally by 'The
Transition Handbook' (Rob Hopkins) sees the combination of peak oil and climate change as an
opportunity to restructure society with local resilience and ecological stewardship.[151]

[edit] Peak oil for individual nations

US oil production (lower 48 crude oil only) and Hubbert's high estimate.
Canadian conventional oil production peaked in 1973, but oil sands production is forecast to increase to
at least 2020

Mexican production peaked in 2004 and is now in decline

Further information: List of oil fields

Peak oil as a concept applies globally, but it is based on the summation of individual nations
experiencing peak oil. Although the most recent International Energy Agency and United States
Energy Information Administration production data show record and rising production in Canada
and China, in the State of the World 2005, Worldwatch Institute observes that oil production is in
decline in 33 of the 48 largest oil-producing countries.[152] Other countries have also passed their
individual oil production peaks.

The following list shows significant oil-producing nations and their approximate peak oil
production years, organized by year.[153]

 Japan: 1932 (assumed; source does not specify)

 Germany: 1966
 Libya: 1970
 Venezuela: 1970
 USA: 1970[154]
 Iran: 1974
 Nigeria: 1979
 Trinidad & Tobago: 1981[155]
 Egypt: 1987[156]
 France: 1988
 Indonesia: 1991[157]
 Syria: 1996[158]
 India: 1997
 New Zealand: 1997[159]
 UK: 1999
 Argentina: 1999 (BP statistical workbook 2007)
 Colombia: 1999 (BP statistical workbook 2007)
 Australia: 2000 (BP statistical workbook 2007; A 2007 report by ABARE predicted that
production may rise enough for an ultimate peak in 2009 [160])
 Norway: 2000[161]
 Oman: 2000[162]
 Mexico: 2004[163]
 Russia: an artificial peak occurred in 1987 shortly before the Collapse of the Soviet Union, but
production subsequently recovered, making Russia the second largest oil exporter in the world.
Figures from early 2008, statements by officials, and analysis suggest that production may have
peaked in 2006/2007.[164][165] Lukoil vice president Leonid Fedun has said $1 trillion would have to
be spent on developing new reserves if current production levels were to be maintained. [166]

Peak oil production has not been reached in the following nations (these numbers are estimates
and subject to revision):[167]

 Kuwait: 2013
 Saudi Arabia: 2014
 Iraq: 2018

[edit] Oil price

Main articles: Oil price increases since 2003 and Price of petroleum

New York Mercantile Exchange prices for West Texas Intermediate 1996 - 2009

Long-term oil prices, 1861-2008 (top line adjusted for inflation).

In terms of 2007 inflation adjusted dollars, the price of oil peaked on June 30, 2008 at over $143
a barrel. Before this period, the maximum inflation adjusted price was the equivalent of $95–
100, in 1980.[168] Crude oil prices in the last several years have steadily risen from about $25 a
barrel in August 2003 to over $130 a barrel in May 2008, with the most significant increases
happening within the last year. These prices are well above those that caused the 1973 and 1979
energy crises. This has contributed to fears of an economic recession similar to that of the early
1980s.[11] One important indicator that supported the possibility that the price of oil had begun to
have an effect on economies was that in the United States, gasoline consumption dropped by .5%
in the first two months of 2008,[169] compared to a drop of .4% total in 2007.[170]

However some claim the decline in the U.S. dollar against other significant currencies from 2007
to 2008 is a significant part of oil's price increases from $66 to $130.[171] The dollar lost
approximately 14% of its value against the Euro from May 2007 to May 2008, and the price of
oil rose 96% in the same time period.

Helping to fuel these price increases were reports that petroleum production is at[5][6][7] or near full
capacity.[9][124][172] In June 2005, OPEC admitted that they would 'struggle' to pump enough oil to
meet pricing pressures for the fourth quarter of that year.[173]

Demand pressures on oil have been strong. Global consumption of oil rose from 30 billion
barrels (4.8×109 m3) in 2004 to 31 billion in 2005. These consumption rates are far above new
discoveries for the period, which had fallen to only eight billion barrels of new oil reserves in
new accumulations in 2004.[174] In 2005, consumption was within 2 million barrels per day
(320×103 m3/d) of production, and at any one time there are about 54 days of stock in the OECD
system plus 37 days in emergency stockpiles.

Besides supply and demand pressures, at times security related factors may have contributed to
increases in prices,[172] including the "War on Terror," missile launches in North Korea,[175] the
Crisis between Israel and Lebanon,[176] nuclear brinkmanship between the U.S. and Iran,[177] and
reports from the U.S. Department of Energy and others showing a decline in petroleum reserves.
[178]

Another factor in oil price is the cost of extracting crude. As the extraction of oil has become
more difficult, oil's historically high ratio of Energy Returned on Energy Invested has seen a
significant decline. The increased price of oil makes unconventional sources of oil retrieval more
attractive. For example, oil sands are actually a reserve of bitumen, a heavier, lower value oil
compared to conventional crude.

[edit] Effects of rising oil prices

Main article: Effects of oil price

World consumption of primary energy by energy type in terawatts (TW), 1965-2005.[179]

In the past, the price of oil has led to economic recessions, such as the 1973 and 1979 energy
crises. 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.[180]
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,
such as coal or liquefied natural gas. 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
vehicles are also gaining in popularity.[181]

In 2008, a report by Cambridge Energy Research Associates stated that 2007 had been the year
of peak gasoline usage in the United States, and that record energy levels would cause an
"enduring shift" in energy consumption practices.[182] 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.[183]

[edit] Historical understanding of world oil supply limits

Although the Earth's finite oil supply means that peak oil is inevitable, technological innovations
in finding and drilling for oil have at times changed the understanding of the total oil supply on
Earth. As scientific understanding of petroleum geology has increased, so has our understanding
of the Earth's total recoverable reserves. Since 1965, major oil surveys have averaged a 95%
confidence Estimated Ultimate Retrieval (P95 EUR) of a little under 2,000 billion barrels
(320×109 m3), though some estimates have been as low as 1,500 billion barrels (240×109 m3),
and as high as 2,400 billion barrels (380×109 m3).[6]

The EUR reported by the 2000 USGS survey of 2,300 billion barrels (370×109 m3) 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 2,300 billion barrels
(370×109 m3) 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 seven 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.[6]

[edit] Criticisms
Some do not agree with peak oil, at least as it has been presented by Matthew Simmons. The
president of Royal Dutch Shell's 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." He also points to the large reserves at the U.S. outer continental shelf, which holds an
estimated 100 billion barrels (16×109 m3) 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,[184] but are in the form of oil shale.
These particular reserves present major environmental, social, and economic obstacles to
recovery.[185][186] Hofmeister also claims that if oil companies were allowed to drill more in the
United States enough to produce another 2 million barrels per day (320×103 m3/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.[187]
Dr. Christoph Rühl, Chief economist of BP, repeatedly uttered strong doubts about the peak oil
hypothesis:[188]

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 of CERA, 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.[189]

[edit In fiction
Alex Scarrow's novel, Last Light,[190] takes place during a peak oil crisis. The book portrays the
collapse of the United Kingdom, as a result of a full-scale terrorist attack against several
important key installations in the Middle-East. It follows the experiences of a family, a father
trapped in Iraq, a mother far away from her children, a daughter and son fending for themselves,
as the complete break-down of law and order causes looting, deaths, and worse.

James Howard Kunstler, author of The Long Emergency[191] and The Geography of Nowhere,[192]
fictionalized his predictions of post-oil civilization into a novel entitled World Made by Hand.[193]
[194]
The book portrays the efforts of Robert Earle, a former software executive elected mayor of a
small town in New York State, who faces the struggle of rebuilding a civil society amid arguing
factions.

Another novel using peak oil for its premise is Robert Charles Wilson's Julian Comstock: A
Story of 22nd Century America.[195] set a hundred years after the end of the age of oil, where
American society has fallen back to a level similar to that of the Civil War. The book follows
Julian Comstock, the nephew of the President, during a series of battles and adventures across an
American landscape where many cities have been scavenged for their precious resources.

The Mad Max films are based in a dystopian Australia, in which (Mad Max 2: The Road Warrior
explains) the general social collapse has occurred because of a global energy shortage,
particularly of oil.

Frontlines: Fuel of War, a 2008 First-Person Shooter video game for the Xbox 360 and PC, is set
during a fictional World War after peak oil occurs.
Hubbert peak theory

From Wikipedia, the free encyclopedia

Jump to: navigation, search

"Hubbert peak" redirects here. For the episode of The West Wing, see The Hubbert Peak.

M. King Hubbert's original 1956 prediction of world petroleum production rates.

2004 U.S. government predictions for oil production other than in OPEC and the former Soviet Union

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. It is one of the primary theories on peak oil.

Choosing a particular curve determines a point of maximum production based on discovery rates,
production rates and cumulative production. Early in the curve (pre-peak), the production rate
increases because of the discovery rate and the addition of infrastructure. Late in the curve (post-
peak), production declines because of resource depletion.

The Hubbert peak theory is based on the observation that the amount of oil under the ground in
any region is finite, therefore the rate of discovery which initially increases quickly must reach a
maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of
32 to 35 years.[1][2] The theory is named after American geophysicist M. King Hubbert, who
created a method of modeling the production curve given an assumed ultimate recovery volume.

Hubbert's peak
"Hubbert's peak" can refer to the peaking of production of a particular area, which has now been
observed for many fields and regions.

Hubbert's Peak was achieved in the continental US in the early 1970s. Oil production peaked at
10.2 million barrels a day. Since then, it has been in a gradual decline.

Peak oil as a proper noun, or "Hubbert's peak" applied more generally, refers to a singular event
in history: the peak of the entire planet's oil production. After Peak Oil, according to the Hubbert
Peak Theory, the rate of oil production on Earth would enter a terminal decline. On the basis of
his theory, in a paper[3] he presented to the American Petroleum Institute in 1956, Hubbert
correctly predicted that production of oil from conventional sources would peak in the
continental United States around 1965-1970. Hubbert further predicted a worldwide peak at
"about half a century" from publication and approximately 12 gigabarrels (GB) a year in
magnitude. In a 1976 TV interview[4] Hubbert added that the actions of OPEC might flatten the
global production curve but this would only delay the peak for perhaps 10 years.

[edit] Hubbert's theory

[edit] Hubbert curve

The standard Hubbert curve. For applications, the x and y scales are replaced by time and production
scales.
U.S. Oil Production and Imports 1920 to 2005
Norway's oil production and a Hubbert curve approximating it.

In 1956, Hubbert proposed that fossil fuel production in a given region over time would follow a
roughly bell-shaped curve without giving a precise formula; he later used the Hubbert curve, the
derivative of the logistic curve,[5] for estimating future production using past observed
discoveries.

Hubbert assumed that after fossil fuel reserves (oil reserves, coal reserves, and natural gas
reserves) are discovered, production at first increases approximately exponentially, as more
extraction commences and more efficient facilities are installed. At some point, a peak output is
reached, and production begins declining until it approximates an exponential decline.

The Hubbert curve satisfies these constraints. Furthermore, it is roughly symmetrical, with the
peak of production reached when about half of the fossil fuel that will ultimately be produced has
been produced. It also has a single peak.

Given past oil discovery and production data, a Hubbert curve that attempts to approximate past
discovery data may be constructed and used to provide estimates for future production. In
particular, the date of peak oil production or the total amount of oil ultimately produced can be
estimated that way. Cavallo[6] defines the Hubbert curve used to predict the U.S. peak as the
derivative of:

where Qmax is the total resource available (ultimate recovery of crude oil), Q(t) the cumulative
production, and a and b are constants. The year of maximum annual production (peak) is:

[edit] Use of multiple curves

 This section requires expansion.

The sum of multiple Hubbert curves, a technique not developed by Hubbert himself, may be
used in order to model more complicated real life scenarios.[7]

[edit] Definition of reserves

Almost all of Hubbert peaks must be put in the context of high ore grade. Except for fissionable
materials, any resource, including oil, is theoretically recoverable from the environment with the
right technology. In contrast, Hubbert was concerned with "easy" oil, "easy" metals, and so forth
that could be recovered without greatly advanced mining efforts and how to time the necessity of
such resource acquisition advancements or substitutions by knowing an "easy" resource's
probable peak. Also, as reserves become more difficult to extract there is the possibility that
mining or alternatives are too expensive for developing countries.

For heavy crude or deep water drilling attempts, such as Noxal oil field or tar sands or oil shale,
the price of the oil extracted will have to include the extra effort required to mine these
resources. According to the U.S. Minerals Management Service, areas such as the Outer
Continental Shelf may also incur higher costs due to environmental concerns. So not all oil
reserves are equal, and the more difficult reserves are predicted by Hubbert as being typical of
the post-peak side of the Hubbert curve.

[edit] Reliability

US oil production (Lower 48 states crude oil only) and Hubbert high estimate for the US.

Hubbert, in his 1956 paper,[3] presented two scenarios for US conventional oil production (crude
oil + condensate):

 most likely estimate: a logistic curve with a logistic growth rate equal to 6%, an ultimate
resource equal to 150 Giga-barrels (Gb) and a peak in 1965.
  upper-bound estimate: a logistic curve with a logistic growth rate equal to 6% and ultimate
resource equal to 200 Giga-barrels and a peak in 1970.

Hubbert's upper-bound estimate, which he regarded as optimistic, accurately predicted that US

oil production would peak in 1970. Forty years later, the upper-bound estimate has also proven
to be very accurate in terms of cumulative production, less so in terms of annual production. For
2005, the upper-bound Hubbert model predicts 178.2 Gb cumulative and 1.17 Gb current
production; actual US production was 176.4 Gb cumulative crude oil + condensate (1% lower
than the upper bound estimate), with annual production of 1.55 Gb (32% higher than the upper
bound estimate).

A post-hoc analysis of peaked oil wells, fields, regions and nations found that Hubbert's model
was the "most widely useful"(providing the best fit to the data), though many areas studied had a
sharper "peak" than predicted.[8]

[edit] Economics

Oil imports by country

[edit] Energy return on energy investment

When oil production first began in the mid-nineteenth century, the largest oil fields recovered
fifty barrels of oil for every barrel used in the extraction, transportation and refining. This ratio is
often referred to as the Energy Return on Energy Investment (EROI or EROEI). Currently,
between one and five barrels of oil are recovered for each barrel-equivalent of energy used in the
recovery process. As the EROEI drops to one, or equivalently the Net energy gain falls to zero,
the oil production is no longer a net energy source. This happens long before the resource is
physically exhausted.
Note that it is important to understand the distinction between a barrel of oil, which is a measure
of oil, and a barrel of oil equivalent (BOE), which is a measure of energy. Many sources of
energy, such as fission, solar, wind, and coal, are not subject to the same near-term supply
restrictions that oil is. Accordingly, even an oil source with an EROEI of 0.5 can be usefully
exploited if the energy required to produce that oil comes from a cheap and plentiful energy
source. Availability of cheap, but hard to transport, natural gas in some oil fields has led to using
natural gas to fuel enhanced oil recovery. Similarly, natural gas in huge amounts is used to power
most Athabasca Tar Sands plants. Cheap natural gas has also led to Ethanol fuel produced with a
net EROEI of less than 1, although figures in this area are controversial because methods to
measure EROEI are in debate.

[edit] Growth-based economic models

World energy consumption & predictions, 1970-2025. Source: International Energy Outlook 2004.

Insofar as economic growth is driven by oil consumption growth, post-peak societies must adapt.
Hubbert believed:[9]

Our principal constraints are cultural. During the last two centuries we have known nothing
“ but exponential growth and in parallel we have evolved what amounts to an exponential-
growth culture, a culture so heavily dependent upon the continuance of exponential
growth for its stability that it is incapable of reckoning with problems of nongrowth. ”
Some economists describe the problem as uneconomic growth or a false economy. At the
political right, Fred Ikle has warned about "conservatives addicted to the Utopia of Perpetual
Growth".[10] Brief oil interruptions in 1973 and 1979 markedly slowed - but did not stop - the
growth of world GDP.[11]

Between 1950 and 1984, as the Green Revolution transformed agriculture around the globe,
world grain production increased by 250%. The energy for the Green Revolution was provided
by fossil fuels in the form of fertilizers (natural gas), pesticides (oil), and hydrocarbon fueled
irrigation.[12]

David Pimentel, professor of ecology and agriculture at Cornell University, and Mario
Giampietro, senior researcher at the National Research Institute on Food and Nutrition (INRAN),
place in their study Food, Land, Population and the U.S. Economy the maximum U.S. population
for a sustainable economy at 200 million. To achieve a sustainable economy world population
will have to be reduced by two-thirds, says the study.[13] Without population reduction, this study
predicts an agricultural crisis beginning in 2020, becoming critical c. 2050. The peaking of
global oil along with the decline in regional natural gas production may precipitate this
agricultural crisis sooner than generally expected. Dale Allen Pfeiffer claims that coming
decades could see spiraling food prices without relief and massive starvation on a global level
such as never experienced before.[14][15]

[edit] Hubbert peaks

Although Hubbert peak theory receives most attention in relation to peak oil production, it has
also been applied to other natural resources.

[edit] Natural gas

Main article: Peak gas

Doug Reynolds predicted in 2005 that the North American peak would occur in 2007.[16] Bentley
(p. 189) predicted a world "decline in conventional gas production from about 2020".[17]

Even if new extraction techniques yield additional sources of natural gas, like coalbed methane,
the energy returned on energy invested will be much lower than traditional gas sources, which
inevitably leads to higher costs to consumers of natural gas.[citation needed]

[edit] Coal

Main article: Peak coal

Peak coal is significantly further out than peak oil, but we can observe the example of anthracite
in the USA, a high grade coal whose production peaked in the 1920s. Anthracite was studied by
Hubbert, and matches a curve closely.[18] Pennsylvania's coal production also matches Hubbert's
curve closely, but this does not mean that coal in Pennsylvania is exhausted—far from it. If
production in Pennsylvania returned at its all time high, there are reserves for 190 years. Hubbert
had recoverable coal reserves worldwide at 2500 × 109 metric tons and peaking around 2150
(depending on usage).

More recent estimates suggest an earlier peak. Coal: Resources and Future Production (PDF
630KB[19]), published on April 5, 2007 by the Energy Watch Group (EWG), which reports to the
German Parliament, found that global coal production could peak in as few as 15 years.[20]
Reporting on this Richard Heinberg also notes that the date of peak annual energetic extraction
from coal will likely come earlier than the date of peak in quantity of coal (tons per year)
extracted as the most energy-dense types of coal have been mined most extensively.[21] A second
study, The Future of Coal by B. Kavalov and S. D. Peteves of the Institute for Energy (IFE),
prepared for European Commission Joint Research Centre, reaches similar conclusions and states
that ""coal might not be so abundant, widely available and reliable as an energy source in the
future".[20]

Work by David Rutledge of Caltech predicts that the total of world coal production will amount
to only about 450 gigatonnes.[22] This implies that coal is running out faster than usually
assumed.

Finally, insofar as global peak oil and peak in natural gas are expected anywhere from
imminently to within decades at most, any increase in coal production (mining) per annum to
compensate for declines in oil or NG production, would necessarily translate to an earlier date of
peak as compared with peak coal under a scenario in which annual production remains constant.

[[edit] Criticism
Economist Michael Lynch[45] argues that the theory behind the Hubbert curve is too simplistic
and relies on an overly Malthusian point of view.[46] Lynch claims that Campbell's predictions for
world oil production are strongly biased towards underestimates, and that Campbell has
repeatedly pushed back the date.[47][48]

Leonardo Maugeri, vice president of the Italian energy company Eni, argues that nearly all of
peak estimates do not take into account unconventional oil even though the availability of these
resources is significant and the costs of extraction and processing, while still very high, are
falling because of improved technology. He also notes that the recovery rate from existing world
oil fields has increased from about 22% in 1980 to 35% today because of new technology and
predicts this trend will continue. The ratio between proven oil reserves and current production
has constantly improved, passing from 20 years in 1948 to 35 years in 1972 and reaching about
40 years in 2003.[49] These improvements occurred even with low investment in new exploration
and upgrading technology because of the low oil prices during the last 20 years. However,
Maugeri feels that encouraging more exploration will require relatively high oil prices.[50]

Edward Luttwak, an economist and historian, claims that unrest in countries such as Russia, Iran
and Iraq has led to a massive underestimate of oil reserves.[51] The Association for the Study of
Peak Oil and Gas, or ASPO responds by claiming neither Russia nor Iran are troubled by unrest
currently, but Iraq is.[52]
Cambridge Energy Research Associates authored a report that is critical of Hubbert-influenced
predictions:[53]

Despite his valuable contribution, M. King Hubbert's methodology falls down because it
“ does not consider likely resource growth, application of new technology, basic commercial
factors, or the impact of geopolitics on production. His approach does not work in all cases-
including on the United States itself-and cannot reliably model a global production outlook.
Put more simply, the case for the imminent peak is flawed. As it is, production in 2005 in
the Lower 48 in the United States was 66 percent higher than Hubbert projected. ”
CERA does not believe there will be an endless abundance of oil, but instead believes that global
production will eventually follow an “undulating plateau” for one or more decades before
declining slowly,[54] and that production will reach 40 Mb/d by 2015.[55]

Alfred J. Cavallo, while predicting a conventional oil supply shortage by no later than 2015, does
not think Hubbert's peak is the correct theory to apply to world production.