Life After The Low Hanging Fruit – What is Peak Oil?

by Erik North on June 29, 2012

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As an aside, peak oil in it’s own way got me into the energy profession…long story.

What is peak oil? And why does it produce such a polarized response when you bring it up? I mean, seriously…Google “peak oil” and randomly pick a few sites. They all either tout peak oil as the ecological comeuppance that unrestrained capitalism has unleashed or an overblown hippy fantasy that either doesn’t exist and/or is easily solved.

The reality is likely somewhere between these two poles. What is peak oil? Without wandering into too much socio-political speculation, peak oil doesn’t mean running out of oil. But it is the very real, geological limit to how quickly and how much oil can be pulled out of the ground.

What is Peak Oil (your obligatory boring Wiki – style definition)
Peak oil, as a generic term, is the point when world production of petroleum peaks and begins to decline. M. King Hubbert first articulated this concept (sometimes called Hubbert peak theory) in 1956. It was based on the observation that the production rates from individual oil fields followed a bell curve-like distribution. This also came to be called ‘Hubbert’s Curve’.

Hubbert's peak

Hubbert realized regional production rose and fell just like individual wells. Source:

Production would rapidly rise as infrastructure was built and the best pockets of oil were tapped. Eventually, it would reach a peak, sustain that peak for some time then decline over time. Hubbert’s observations showed this held true for individual wells, oil fields, geographical regions, entire countries and, yes, entire planets.

Imagine picking apples from a tree. The first apples picked would be those still fresh apples on the ground. Then the proverbial low hanging fruit, then those within easy reach in the branches. In not too long a time you would have picked all the ‘easy fruit’. Getting those higher up would require ladders, more help and possibly heavy duty equipment like a hydraulic lift. Everything would be slower and more expensive.

Hubbert predicted in 1956 that US oil production would peak in approximately 1970. Given that the US was the world’s largest oil producer and exporter (yes, exporter) at the time, oil industry insiders responded by laughing so hard they would spill their vodka martinis all over their three-piece suits. “Hey King” they’d say at cocktail parties, “Tell us the one again where the U.S. stops exporting oil.”

And it turned out that Hubbert was wrong. It took until 1972-73 for oil production to reach its all-time peak and in the early 90’s we actually began importing more oil than we were producing.

So what is peak oil? It is not, and I can’t stress this enough not, when the world runs out of oil. But in a world built on cars, ships and plastic, it is the point where we can’t produce oil more quickly. Why is this important? The human body needs 8 glasses of water a day; if you take in 7 glasses a day eventually you’ll die.

While some speculation portends apocalyptic consequences to peak oil, the reality is deeply deeply uncertain. We do however know some basic parameters. To quote Ron Oxburgh, former Chairman of Shell (2008), “It’s pretty clear there is not much chance of finding significant quantities of new cheap oil. Any new or unconventional oil is going to be expensive.” Oil companies don’t drill hundreds of miles offshore and five miles below the surface for fun. It is simply where the oil is.

Another point is that there is huge, huge room for improvement in how efficiently we use oil. 55% of worldwide oil use is transportation. Remember I mentioned the 8 glasses of water you need to live. Well, right now we’re drinking like 42 glasses a day. There’s room for improvement to say the least

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