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Peak Oil: A Real Threat to Society?

By Edited Nov 26, 2014 2 1

 

gas

When oil was first discovered in the U.S., life changed for every single American. Commercial and civilian use for petroleum skyrocketed as U.S. production of different materials and products soared. During this time, some geologists firmly believed that oil would never deplete. Furthermore, they figured the U.S. was not the only country with petroleum and others must have had this resource as well. 

In the 1950s, an American geologist named M. King Hubbert believed that U.S. oil production would peak in 1970. Hubbert did research on the concept of peak oil for decades. He was convinced that U.S. production would simply be maxed out by 1970. Many geologists and petroleum experts simply laughed at Hubbert's theory.

Hubbert

Lo and behold, U.S. oil production peaked in 1970! Hubbert's theory explained how overall production would reach a maximum rate of extraction, and eventually it's production would go into free fall and never increase again.

As time passed, Hubbert's theory eventually became magnified when geologists realized peak oil could occur worldwide. This concept is spoken about in Matthew Simmons' book “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy”. Simmons, a former investment banker and energy policy adviser to Pres. George W. Bush, speaks about peak oil on an international level and explicitly explains how Saudi Arabian oil production has already peaked. Simmons' book attempts to expose Saudi Aramco executives and claims that the Saudis lied about both petroleum reserve numbers and production numbers.

 

Saudis

Critics of the book believe that Simmons only offers the reader just a hypothesis of oil depletion and international production peaking. Moreover, Simmons fails to mention renewable energy, Canadian tar sands, and other alternative energy sources. Some critics felt that Simmons' book was just another interpretation of the Olduvai theory, a theory with little evidence and a weak hypothesis. The Olduvai theory is a hypothetical doomsday scenario with cataclysmic events occurring, with peak oil being one of them.

city

Some energy experts and economists evaluated this theory (mainly looking at Hubbert's theory alone) and concluded that by the year 2000, many industrialized nations would be forced to engage in military confrontations to control monolithic petroleum reserves in the Middle East. When the same energy experts and economists tied this concept to Simmons' idea, it became the chief theory behind the 2003 Iraq War. The theory seemed even more relevant since Simmons was Pres. Bush's energy policy adviser. At the same time, others believed that peak oil was an imminent threat, not just to the world, but specifically to the U.S. economy which ultimately led to the U.S. seizing Iraq's oil wells. Therefore, this would prevent nations such as China and Russia from accessing Iraqi petroleum.

In reality, this never occured. American energy companies were forced to bid for Iraqi oil contracts (mainly in the Northern parts of Iraq). Chinese, Russian, French, and Canadian companies also bid for these contracts. The real kicker here is that these nations never supported the Iraq War in the first place! In some cases American energy companies were even barred from making bids for Iraq's oil fields while Chinese companies won these contracts instead. Clearly the connection between peak oil and the Iraq war do not correlate in any possible way.

US Military

Currently, the world consumes around 85 million barrels of petroleum a day. It is estimated that this number will increase to around 100 million barrels a day by 2020. In the scenario that OPEC (Organization of the Petroleum Exporting Countries) nations do have colossal declines in production, there is no doubt that the price of oil will rise. However, that does not mean that peak oil will be here permanently. In recent years, shale has been a breakthrough in the U.S. with billions of dollars being invested into the industry. Shale gives oil and gas companies new opportunities to explore for more resources. Some experts actually believe with the discovery of shale, U.S. oil and gas production may reach higher levels than before. Furthermore, one must understand that peak oil clearly does not mean that oil will run out; rather that it will become exceptionally expensive due to production rates collapsing. Consequently, this would lead to potential economic difficulties for economies that solely run on petroleum.

 

Texas oil

There is no doubt, peak oil can be a frightening scenario. Fortunatley, there are behemoth amounts of new technologies and methods that natural resources can be extracted with. One should look to Hubbert and Simmons as individuals who were concerned about the future and made valid arguments about the theory. The chief concern that humanity faces is the time period it will take to implement these new technologies. Let's hope they are applied swiftly and peak oil can be just a theory of the past.

 

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy
Amazon Price: $24.50 $1.93 Buy Now
(price as of Nov 26, 2014)
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Comments

Nov 22, 2014 5:47am
Joey_Batz
Great article that clears up an important misconception about Peak Oil. Most people believe that the Peak Oil Theory is simply that we are going to run out of oil and propel us into a Mad Max scenario of warlords forcing us to compete in Thunderdome matches to fill up our gas tanks. They don't realize that Peak Oil is simply the period where the demand for oil (and thus price) outpaces the supply and production of it, leading to higher prices all around, until new oil production technologies balance it out. People freaking out about oil also tend to forget about natural gas and nuclear power.
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