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Hubbert peak theory

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The Hubbert Peak theory, also known as the oil peak or peak oil theory, is an influential theory – part economic, part geological – regarding the long-term macroeconomic availability of oil, attributed to the geophysicist M. King Hubbert. The theory predicts that oil supply in a region will follow a pattern of a long increase of availability, a plateau or slow decline after the "peak," and a steep decline at the end. The theory has been a very good description of oil production in the continental United States, but is not consistent with overall world oil production in the last few decades. The applicability of the concept is somewhat controversial, but the theory has many economic and foreign policy ramifications.

The theory

The Hubbert curve, devised by M. King Hubbert, predicts future oil availability.

In 1956, Hubbert began to use a mathematical model to predict the rate of petroleum extraction. According to his model, the rate of production of oil is determined by the rate of new oil well discovery; a "Hubbert peak" in the oil extraction rate was forecast to be followed by a gradual decline of oil production to nothing. This pattern's form is known as the Hubbert curve, which is a bell shaped curve; see that article for mathematical details.

The general trend of oil availability for a single oil field follows this pattern. Once an oil reservoir has been discovered, production is initially small because the required infrastructure has not been developed. Step by step, more wells are drilled and better facilities are installed in order to produce an increasing amount of oil. At some point, a peak output is reached not to be exceeded even with improved technology or additional drilling. After the peak but before the last drop of oil has been extracted another significant point is reached when it takes more energy to recover and process one barrel of oil than the amount of energy contained in this one barrel of oil. At that point oil is not worthwhile to extract and that oil field is abandoned. This is true regardless of the price of oil.

Wider applications

Hubbert, in 1956, accurately predicted oil production in the lower-48 United States would peak in the early 1970s. U.S. oil production did indeed peak in 1970, and has been decreasing since then. According to Hubbert's model, U.S. oil reserves will be exhausted before the end of the 21st century.

Whether the Hubbert Peak is applicable to world production is controversial. However, there is little disagreement on the finite nature of earth's oil reserves. Using published sources of world oil production do not give a production rate that looks like the Hubbert peak. However, a few analysts have controversial argued that when you graph production based on the date that the oil in the field was found, one gets a Hubbert peak. Also, graphing reserves recoverable by a given level of technology produces a peak that looks like a Hubbert peak.

Supporters of the Hubbert Peak model argue that world oil production will have peaked by, at the earliest 2004, or at the latest 2015. Recent studies indicate the peak will take place before 2008. Determining when oil production has peaked is difficult and not apparent until after current and potential future production is determined to be less than in the past. North Sea production peaked in 2002.

Some have argued that exacerbating the problem is the increasing global demand for oil. Population growth and increased global economic prosperity all affect global oil demand. They point to the fact that in a recent year 25 billion barrels of oil were consumed world-wide, while only 8 billion barrels of new oil reserves were discovered. Thus it is argued, that even if there are temporarily sufficient oil reserves that could be used to meet rising global demand, there is an unknown limit on the increase of oil production capacity.

A counterargument to this view is notes that the notion of oil reserves is misleading as it refers only of oil which is recoverable at a given price and technology level. In this view, creasing the price of oil and technology will increase the amount of oil available.

Effects of a world peak

Economic growth and prosperity over the 20th century has been due to the use of oil as a fuel and fertilizer, absent a suitable replacement the world would suffer recessions and food shortages with increasing severity. Cheap fossil fuel has been the foundation on which the population explosion over the last century has been based, any prolonged fossil fuel shortage, if not properly substituted, will likely lead to major population changes.

The most recent time oil production declined was during the Iranian Revolution of 1979, when supply was artificially curtailed for a limited time by international politics. Oil prices rose to what would be $80 a barrel in today's prices after factoring for inflation, and a world-wide recession followed.

Some believe that, the peak of oil production portends drastic impacts for human culture and modern technological society, which is currently heavily dependent on oil as a fuel and chemical feedstock. Over 90% of transportation in the United States relies on oil. Some envisage a Malthusian catastrophe occurring as oil becomes increasingly inefficient to produce. No other known energy source is as cheap (to extract), as easy to transport and contains as much energy as oil.

Others believe in a "market solution" to an oil supply crisis, believing that the rise in oil prices will stimulate investment in oil replacement technologies and/or more efficient oil extraction technologies. One possible replacement may be using Hydrogen as a fuel, though Hydrogen is not a source of energy but an energy carrier (like electricity) and currently requires more energy to produce than it contains (hydrogen production currently relies on fossil fuels which would be increasingly unavailable in a oil or natural gas shortage). Another alternative could be nuclear power but the long term waste storage problem have not been solved and even if nuclear power output was increased by a factor if 10 it would still only provide just a fraction of the energy oil provides. There are a number of unconventional sources of oil such as oil sands, tar shale or bitumen which could be used but they suffer from even more pronounced extraction inefficiency problems and have a very large environmental impact.

Still others believe the world's remaining fossil fuel reserves should be used as an investment in renewable energy infrastructure such as wind power, solar power and hydropower which do not suffer from a finite energy reserve.

See also

Further reading

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