of Peak Oil & Economic Crisis: Summary |
Summarized by Walter Sorochan
Posted 2009 Updated February 8, 2011; May 1, 2016
As predicted herein in 2009, there is a glut of oil in the world.
The demand for oil has gone down with the slowing down of world economy.
Oil workers around the world have been laid off and hundreds of oil rigs
closed. The price of oil hovers around $40 per barrel; the profit
breaking point for oil drillers making enough money to just stay in
business. Oil as a source of powering electric power plants is
being replaced by less expensive and cleaner natural gas.
Oil field decline
With the exception of one find off the coast of Brazil, no major
new oil fields have been discovered in over 35 years. More than 80%
of the oil pumped today comes from wells that are at least 20 years
old — and those oil fields are now in decline. Alaskan fields are in
decline, and so are Mexico’s. The U.K., one of the world’s great oil
exporters for 25 years, will be importing oil within the decade.
And despite promises to increase oil production over the past
three years, Saudi Arabia has been unable to boost output by a
Now, according to the U.S. Army Corps of Engineers, there are
only 41 years-worth of proven oil reserves left on Earth.
And to make matters worse, not a single oil refinery has been
built in America since 1976 — while the number of operational
refineries is falling fast. In 1981, the U.S. had 324 oil
refineries. Today [ 2008 ], there are just 132.
Two oil issues have been used by TV and newspaper reporters that really
confused politicians in the past election year. One issue has to do with
use of the term "peak oil" and the other issue has to do with politicians
stating that the way to solve the energy crisis and dependence on foreign
oil is to drill for more oil! Both issues are related. We need to
understand the first, that is, peak oil, before unraveling the spin on "
drill for more oil!" This documented paper presents information as a
time-line on oil supply in the world. Peak Oil --- What is
"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 appears to grow
exponentially until the rate peaks and then declines, sometimes rapidly,
until the field is depleted. It 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. It is important to note
that peak oil is not about running out of oil, but the peaking and
subsequent decline of the production rate of oil." Peak oil definition
Peak Oil as a concept applies globally, but it is based on the
summation of individual nations experiencing peak oil. In State of the
World 2005, Worldwatch Institute observes that oil production is in
decline in 33 of the 48 largest oil-producing countries. [ Blanchard, Khebab & oil drum projections,Klare,
WorldWatch Institute; see references for countries ] Other
countries have also passed their individual oil production peaks. Peak
oil concept worldwide
Focus on the current oil crisis in United States in 2008 has been made to
appear as if the energy-oil crisis just happened innocently out of
nowhere. But such is not the case. We have had numerous warnings from
energy and oil experts since 1956.
In 1956, geologist M King Hubbert, [
Deffeyes, Hubbert ] predicted that U.S. oil production would peak
in the early 1970s. Almost everyone, inside and outside the oil industry,
rejected Hubbert's analysis. The controversy raged until 1970, when U.S.
production of crude oil began to fall. Hubbert was right.
His logistic model, now called Hubbert peak theory, and its variants
have been shown to be descriptive with reasonable accuracy of the peak
and decline of production from oil wells, fields, regions, and countries.
[ Deffeyes, Hubbert ]
Another example: Reynolds, an associate professor of oil and energy
economics at the University of Alaska Fairbanks, alluded to it in
“ A peak in world production will soon be upon us and will
hit today's economy even as hard as the 1930s Great Depression. [ Reynolds, printed in 2004 ] The
Association for the Study of Peak Oil, also supports this time-line.
Unfortunately, most government and non-government reports support a 10-
to 30-year time frame before oil shortages occur. “ [ Reynolds ]
Then there has been a continuing debate since 2004 over why USA really
went to war in Iraq. The debate connects the invasion of Iraq to US
dependence on oil.
"The elephant in the drawing room was the fact that global oil
production is likely to peak within about a decade. Aggregate oil
production in the developed world has been falling since 1997, and all
major forecasters expect world output excluding Opec to peak by the
middle of the next decade. From then on everything depends on the
cartel, but unfortunately there is growing evidence that Opec's members
have been exaggerating the size of their reserves for decades."
"Oil consultancy PFC Energy briefed Dick Cheney in 2005 that on a
more realistic assessment of Opec's reserves, its production could peak
by 2015. A report by the US Department of Energy, also in 2005,
concluded that without a crash program of mitigation 20 years before the
event, the economic and social impacts of the oil peak would be
"unprecedented." [ Strahan, 2007 ]
in 2005 a similar article [ Hirsch
] that the world was nearing peak oil production:
“ Authored by Robert L. Hirsch, Roger Bezdek and Robert Wendling and
entitled the Peaking of World Oil production: Impacts, Mitigation,
& Risk Management, the report is an assessment requested by the US
Department of Energy (DoE), National Energy Technology Laboratory."
"It was prepared by Hirsch, who is a senior energy programme adviser
at the private scientific and military company, Science Applications
International Corporation (SAIC)."
"But this brand new senior-level report on "peak oil" is
unprecedented in US government circles. It is not just the existence of
the report itself that is such a landmark in the current oil debate.
Its conclusions also pull no punches."
"World oil peaking is going to happen," the report says. Only the
"timing is uncertain." "The authors of the report also dismiss the power
of the markets to solve any oil peak. They call for the intervention of
governments. But also they rather worryingly point to a need to exclude
public debate and environmental concerns from the process. They say
this is needed to speed up decision-making."
"Intervention by governments will be required, because the economic
and social implications of oil peaking would otherwise be chaotic. But
the process will not be easy. Expediency may require major changes to
... lengthy environmental reviews and lengthy public involvement."
"Hirsch notes, despite arguments from the major oil companies and
producer nations, that new finds of oil are not replacing oil consumed
each year. Despite the advances in technology reserves are becoming
increasingly difficult to replace.“ [
Porter, 2005 ]
All these warning signals went unheeded in the United States
government. Political candidates cried out that we needed to stop our
dependence on crude oil and that the only way to do so was to drill for
more oil. The spin put on solving the dependence on oil was just that ---
and it fooled the general public into a false belief that we needed to
drill for oil.
"As of October 30, 2008, “the oil and other commodity markets seem
seized with the notion that a rip-roaring, world engulfing depression
is on the way that will demolish oil consumption. People are actually
starting to talk about oil falling all the way to $20 a barrel again.
Is this likely or even remotely possible?" [
Whipple, 2008 ]
"US oil consumption, especially the demand for gasoline has fallen as
auto owners have started to drive fewer miles this year. This has
probably sent the signal to OPEC and other oil exporting nations that
the demand for fossil oil has temporarily slowed down. This signal, in
turn, has also slowed the peaking of oil production."
"Keep in mind the basic proposition of peak oil is that the world is
still burning oil at the rate of 31 billion barrels a year. Seventy
five million barrels a day are coming from currently producing fields
that with each passing year will produce anywhere from 4 to 8 percent
less oil." [ Whipple, 2008 ]
"The Financial Times has leaked the results of the International
Energy Agency's [ IEA ] long-awaited study of the depletion profiles of
the world's 400 largest oilfields, indicating that, "Without extra
investment to raise production, the natural annual rate of output
decline is 9.1 per cent." This is a stunning percentage figure."
"Considering regular crude oil only, this means that 6.825 million
barrels a day of new production capacity must come on line each year
just to keep up with the aggregate natural decline rate in existing
oilfields. That's a new Saudi Arabia every 18 months. The Financial
Times story goes on:"
"The findings suggest the world will struggle to produce
enough oil to make up for steep declines in existing fields, such as
those in the North Sea, Russia and Alaska, and meet long-term demand.
The effort will become even more acute as [oil] prices fall and
investment decisions are delayed."
"This is putting it mildly.
Investment capital is being vaporized almost daily in a global
deflationary bonfire of unprecedented ferocity. Oil production projects
are being mothballed left and right. Inter alia, the IEA takes
the requisite swat at "peak oil theorists," who, the agency somehow
still believes, are saying that the world is "running out of oil." Of
course that's NOT what peak oil theorists say, but a correct summation
of their position would have to be followed with a statement to the
effect that, "Our research supports their position," which would be just
"Sadly, the IEA feels it must pull its punch even further. With
adequate investment in new small oilfields and unconventional sources
like tarsands, it insists, the world can still achieve higher levels of
production. In other words, if the $12 trillion that vanished from the
world stock markets last week were invested in new tarsands projects,
then theoretically a few more years of total oil production growth could
be eked out (not growth in net energy production, mind you, but in the
gross—and I do mean gross—production of exotic, very expensive stuff
that it's physically possible to run your car on, assuming you could
afford to do so)."
"Of course, any realistic assessment either of the likelihood of that
level of investment appearing, or of the ability of new projects to
really produce a sufficient rate of flow regardless of the size of the
cash infusion, would end merely in a hearty belly-laugh."
"Evidently peeved about being scooped on its planned November 12
press conference roll-out of the study, the IEA has disavowed the
Financial Times story. But if nine percent is even close to being the
final figure, then it's absolutely clear:" "July
2008 was the all-time peak in world oil production."
Don't expect anyone at the IEA to officially admit that fact until 2025
or so. But among those who pay attention to the evidence and the terms
of the debate, further ink need not be spilled in speculation."
"Peak oil is history.” [
Concept of peak oil is based on reality, history & not
World reaching a peak in oil discoveries is real!
The world is approaching an oil, an economic, a food and a water
crises as of February 6, 2011.
Drilling for more oil will not
solve the demand for energy.
The oil industry is reluctant to
spend money on uncertain oil markets: exploration, drilling and
This suggests government intervention may be
necessary to provide leadership in the supply and demand free
For videos on peak oil, oil supplies and so on, visit:
Blanchard Roger, "Media's advice for increasing global oil production,"
Energy Bulletin, Nov 17 2007. media article
Brandt, A. R. (2007), "Testing Hubbert" (PDF), Energy Policy 35 (5):
3074–3088, doi:10.1016/j.enpol.2006.11.004, Brandt: testing for oil
Deffeyes Kenneth, Hubbert's Peak: The Impending world oil crisis,
Princton University Press, 2008. Hubbert textbook
Heinberg Richard, “Nine Percent,” Post Carbon Institute, October 29,
Hirsch Robert, Roger Bezdek, Robert Wendling, “ PEAKING OF WORLD OIL
PRODUCTION: IMPACTS, MITIGATION, & RISK MANAGEMENT Report, February
2005 Prediction oil peak
This report was prepared as an account of work sponsored by an agency
of the United States Government.
Hubbert, M. King (1956-06). "Nuclear Energy and the Fossil Fuels
'Drilling and Production Practice'" (PDF). API. Retrieved on 2008-04-18.
Hubbert M King, Hubbert's Peak, wikipedia. Hubert peak oil theory
Khebab, "Peak Oil Update - August 2008: Production Forecasts and EIA
Oil Production Numbers," The Oil Drum, September 13, 2008
Oil drum projections
The Oil Drum is a website devoted to the discussion of
energy issues and their impact on society. The site is a resource for
information on peak oil, and related concepts such as oil megaprojects.
Klare Michael T., "The Impending Decline of Saudi Oil Output:Matt
Simmons' Bombshell," Tom Dispatch,June 26, 2005. S Arabia oil peak
Klare, Michael,"Tomgram: Michael Klare on a Saudi Oil Bombshell," Tom
Dispatch,June 26, 2005 S Arabia oil peak
_____, Peak Oil," Wikipedia.
Peak oil defined
Peak Oil: The following list shows significant oil-producing nations
and their approximate peak oil production years, organized by year.
Japan: 1932 (assumed; source does not specify)
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. 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.
New Zealand: 1997
Australia (disputed): 2004; 2001
Peak oil production has not been
reached in the following nations (these numbers are estimates and
subject to revision):
In addition, the most recent International Energy
Agency and US Energy Information Administration production data show
record and rising production in Canada and China. Peak oil concept worldwide
Porter Adam, “US report acknowledges peak oil threat,” Energy Bulletin,
March, 2005, Perpignan, France. US report
Reynolds Doug, “Time to prepare for the coming peak in world oil
production,” Fairbanks News-Miner, December 26, 2004. Alaska oil
Doug Reynolds is an associate professor of oil and energy economics at
the University of Alaska Fairbanks and author of "Scarcity and Growth
Considering Oil and Energy", and "Alaska and North Slope Natural Gas." His
e-mail address is email@example.com.
Strahan, David, “The real casus belli: peak oil,” The Guardian, June
26, 2007. England oil future
David Strahan is the author of The Last Oil Shock: A Survival Guide to
the Imminent Extinction of Petroleum Man Lastoilshock.com
Whipple Tom, “The peak oil crisis: A steepening slope,” Falls
ChurchNews-Press, Virginia, [ Published also Energy Bulletin ], October
30,2008. Peak oil crisis
WorldWatch Institute (2005-01-01). State of the World 2005: Redefining
Global Security. New York: Norton, 107. ISBN 0-393-32666-7.