Busting Media Myths On Peak Oil

Tyler Durden's picture

Submitted by Kurt Cobb via OilPrice.com,

Almost synonymous with the term "peak oil" is M. King Hubbert, perhaps the foremost geophysicist of the 20th century, who first theorized about the eventual decline of oil production in the 1930s. His life has now been chronicled by science writer Mason Inman in a new biography entitled The Oracle of Oil.

Depending upon whom you speak with, peak oil is either a catastrophe waiting to happen or a far-off concern that has already been solved or will be soon. Frequently, peak oil is referred to as a myth. What you rarely hear is that peak oil is an empirical fact having already occurred in dozens of countries.

The term "peak oil" simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines. Because the amount of oil in the Earth's crust is finite, it is logical to assume that one day peak oil production will occur worldwide. The concern is that we as a global society are so accustomed to rising oil production that we have built an entire world around that assumption. Will we be ready when oil production begins to decline?

To shed some light on that and other questions, author Inman takes us from Hubbert's early days at the University of Chicago to his famous speech in 1956 (in which he predicted a peak in U.S. crude oil production no later than 1970) to his days in Washington, D.C. working for the U.S. Geological Survey and his fights there concerning the timing of a U.S. oil production peak.

In the course of the story Inman puts to rest misconceptions about Hubbert and about peak oil.

First and foremost, peak does NOT mean running out. As explained above it means the trend of rising oil production reverses into a decline. When this reversal occurs worldwide, it could pose challenges for a society that has yet to find a cheap, widely available substitute for petroleum to fuel its transportation system. Electric vehicles are still in their infancy and would require huge infrastructure investments. And, petrochemicals made from oil are the basis for a wide variety of clothing, medicines, lubricants, pesticides, and industrial chemicals. Oil is embedded practically everywhere in our lives, and finding substitutes won't be easy in many cases.


Second, forecasting peak oil is NOT tantamount to forecasting disaster. Hubbert himself believed that society could make a successful transition away from petroleum and other fossil fuels to a nuclear- and solar-powered world so long as we started early enough. Far from being a pessimist, Inman tells us, Hubbert was a utopian who believed an efficiently run technocratic society with plenty for all was possible if only we would take the necessary steps.


In fact, Hubbert foresaw some things we now take for granted, for example, that postal mail would be largely replaced by "signals sent by wire" which we, of course, call email. He believed that energy efficiency in the form of thick insulation for homes would become increasingly common. We now see that development in weatherization programs for homeowners and the spread of Passive House technology which reduces heating and cooling needs by 80 to 90 percent.


Third, Hubbert was NOT anti-oil. In fact, he worked for Shell Oil Company for 20 years in production research. Hubbert understood deeply the benefits of oil to human society, and he wanted those benefits to continue. But he believed they would not continue unless new sources of energy were deployed before fossil fuel production began its inevitable decline.


Fourth, contrary to what his critics say, Hubbert did take technological improvements into account when calculating his forecasts for peak. He was aware of unconventional sources of oil such as tar sands, oil shale, and coal-to-liquids technology. But he realized that these sources would be challenging and expensive to exploit.

It turns out he was right. Operators in the Canadian tar sands today are having a difficult time simply maintaining production in the current low-price environment for oil. As for oil shale, despite more than 30 years of research and development including pilot plants, there is no commercial production of oil from oil shale in the United States (which has by far the largest deposits) and very limited production in Estonia (where oil shale is mostly burned directly to produce electricity). It's not clear that standalone facilities that would produce only oil from oil shale would be economical given the American experience.

Coal-to-liquids technology continues to be too expensive to deploy worldwide though it does have a foothold in South Africa. South Africa built these expensive and environmentally dirty facilities during the apartheid period when the country's leaders feared an embargo might curtail oil shipments to South Africa.

There is, of course, the question of just how oracular the "oracle of oil" was. As it turns out, Hubbert's prediction of a peak in U.S. production (which at that time covered the lower 48 states) was right on the money. U.S. crude oil production fell starting in 1970 and continued to fall (with a short respite when Alaskan oil began to flow) until 2008. Then, the advent of a new kind of hydraulic fracturing or fracking (as it is popularly called) made possible the extraction of previously difficult-to-get oil from deep shale deposits (not to be confused with oil shale mentioned above).

U.S. production last year came close to eclipsing the 1970 number, but has fallen back as low prices have forced deep reductions in drilling. Meanwhile, non-shale production continues to fall. A rise in oil prices would certainly revive drilling in American shale deposits. But it is doubtful that this will happen before shrinking conventional production makes it all but impossible to achieve a new all-time high in U.S. production. 

As for world production, in the early 1970s Hubbert calculated that a worldwide peak might come as soon as the mid-1990s. But, he did his original calculations before the high prices and oil crises of the 1970s led to an energy efficiency drive worldwide and resulted in the first ever sustained decline in world oil consumption and flat consumption for many years thereafter.

He later revised his view which ended up being close to that of the U.S. Energy Information Administration in the late 1970s. The agency forecast a probable peak about 2010, but offered a range of 1995 to 2035 depending on energy policies and consumption patterns.

As it turned out, conventional oil, the kind that Hubbert used in his models, the kind that flows as a liquid from the ground--which I call "Beverly Hillbillies oil" after the "bubbling crude" seen in the introduction to the now long-defunct television series--this kind of oil peaked in 2006 according to the International Energy Agency, a consortium of 29 countries which provides ongoing research and information about energy supplies worldwide.

Despite all protestations to the contrary, Hubbert proved prescient once again. That world oil production continues to eke out small gains is due entirely to production from unconventional sources not included in Hubbert's models. But those sources have shown themselves to be exquisitely sensitive to price.

In the two countries best known for unconventional oil, the United States and Canada, production from U.S. deep shale deposits and Canadian tar sands is now shrinking. Alarmingly, without recent growth in oil production in these two countries, worldwide oil production would have declined from 2005 to today. Now that the twin engines of growth, the United States and Canada, are in decline, we may see a fall in worldwide production soon (though whether this will mark the ultimate peak will not be known until many years thereafter).

But, any peak will inevitably result from a mix of economic and geologic factors. So, the new question about oil is, "Can we afford to extract and refine the oil we have left?" Or, more precisely, "Will the cost of extracting these unconventional sources cause economic growth to slow or stagnate?"

This is just the sort of scenario Hubbert feared if we waited too long to address the inevitable transition away from fossil fuels. And, there is reason to believe that low oil prices today reflect an economy slowed by previously high oil prices. These high prices themselves are an indication that we are now facing ever more difficulty and effort in extracting the remaining marginal sources of oil. And, the fact that so many oil companies are now going bankrupt due to low prices tells us that high prices will have to return if we want to extract this difficult-to-get oil in great quantities again.

Hubbert died in 1989 living to see the nuclear accidents at Three Mile Island and Chernobyl. Long concerned about nuclear waste and impatient for a transition, Hubbert decided that global society needed to undertake the rapid deployment of an indisputably clean source of energy, solar power. We would use solar power not only for electricity, but also to make the liquid fuels needed for our transportation system which could be adapted to run on methanol or hydrogen.

Perhaps what irked Hubbert's critics the most was his lifelong skepticism about exponential economic and population growth. So, firmly did he believe that population growth needed to be curtailed that he and his wife had no children. There were limits, he believed, and if they were breached, humans would pay dearly.

Hubbert and his work have once again come into our worldwide discourse as a result of the 2008 oil price spike and the highest ever daily average prices for oil from 2011 through 2014. He is much maligned and much praised these days. But he is perhaps not well understood.

Mason Inman's compelling biography gives all of us, critics and supporters alike, a chance finally to understand this scientific giant and the context within which he spawned insights that continue to be central to our lives.

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Paul John Smith's picture

Hubbert's "technocracy" was an error.

mkkby's picture

What a fucking joke.  So now that global peak oil has turned out to be false, the screamers have re-defined it as a well by well issue.  Too funny.

Before, it was a global peak causing massive economic recession as energy return on investment falls.  But they can't admit their mistake.  So like every other group of liars they just reset the goal posts.  How fed like.

Hardly anyone is drilling now, because prices are low.  The price will go back up some day, and drilling will resume.  That is the ebb and flow of supply. 

Humans can only drill the top couple of miles of crust.  So the cost will go up.  We don't need idiot screamers and their predictions.  Price will tell us all we need to know.

runningman18's picture

The peak oil goofs argued through the entire price bubble that it was all because production costs were increasing because the "easy oil" had run out and the existing oil was harder to get to. As it turns out, the oil price was high because the Fed was pumping money into it through QE, as well devaluing the dollar. When QE ended, oil prices crashed.

Peak oil is a myth until someone can show us where demand is not being met. They can try to change the metrics all they want, but they can't get around supply and demand. Old wells may dry up, but new wells form and are discovered. Oil creation is an abiotic process.

Jethro Dull's picture

What is the mass of the Earth's biota underground?

Anyone ever ponder that against the theories of abiotic, and, surface "fossil" biota created oil?

Take a second, Google a bit, let that thought sink in.

Of course extraction cost is the predominant factor no matter the source.

AGuy's picture

"What a fucking joke. So now that global peak oil has turned out to be false, the screamers have re-defined it as a well by well issue. Too funny."

You remind me of the CNBC talking hosts that laughed/joked at people claiming Housing was in a bubble, right aroun the 2007 timeframe.

"Hardly anyone is drilling now, because prices are low. The price will go back up some day, and drilling will resume. "

Price were falling because the world could not sustain $100/bbl oil. The global economy is saturated in debt.


ian807's picture

I'm sorry about your inability to use google or perform simple arithmetic.

If you can't afford the book, you might start here ( https://en.wikipedia.org/wiki/Cubic_mile_of_oil ) to understand the scale of the problem. If you can't understand, perhaps you can find a numerate friend to explain it to you.

*Extracted* oil is temporarily abundant, due to economics and politics. Fracking too, has delayed the day of reckoning, but not by much.

"Peak oil" is not, and never was, about "running out" of oil. It's about energy return (always declining) and that proxy for bad energy return, price.

You can't run a civilization on oil when it takes more energy to get it than it gives you. You may not be able to run one on its current scale by the time net energy return goes below 5:1. Estimates vary.

We have about 45 years left of conventional oil at ever increasing prices. We might be able to add a decade or two with fracking. We might tack about 35 years on to that with natural gas.

There is not scenario where hydrocarbon energy plays a significant energy role beyond that. By 2100 or so, whatever we have left is... what we have left.

Long before that happens, however, prices become unsustainable and global supply chains start decaying in unpredictable ways.

Your children will live in interesting times.

Consuelo's picture



"Because the amount of oil in the Earth's crust is finite"

it is...?   So it just came to be and - that's it...?  No ongoing geological processes, just ---- finished for good...?


"...according to the International Energy Agency, a consortium of 29 countries which provides ongoing research and information about energy supplies worldwide."

I wonder where the IEA gets its backing & $funding...?


"This is just the sort of scenario Hubbert feared if we waited too long to address the inevitable transition away from fossil fuels."

I thought this notion of 'fossil fuels' (i.e., decaying dinasaur carcasses) was put to rest a long time ago - from the old Chevron television commercials showing animated dinosaurs melting into the dirt below, to be recovered a few million years hence as 91 octane...

E.F. Mutton's picture

I didn't learn of this until 5-6 years ago.  A guy from my block was a retired petroleum engineer who said the whole dinosaur/finite thingy was bullshit.  Sadly, I can't remember details but he said the process he referred to was put forth by some Russian guy, years ago.  I need to do some Googling.

Escrava Isaura's picture

Go ahead. Do some Goggling and some learning, so you don’t kill the next “real” oil engineer of laughing so hard of your nonsense.


MalteseFalcon's picture

"Because the amount of oil in the Earth's crust is finite"

Oil is not the remains of fossils.

Oil is not finite.

Oil does not simply reside in the earth's crust

"... Like, for instance, that German scientists came up with something called the Fischer-Tropsch Process – a formula “unlocking the secrets to how oil is formed” – that the Nazis used to produce synthetic oil, thus explaining how a country with little oil of its own could wage a fuel-intensive, multiyear, mult-ifront war. Or that oil isn’t actually the product of millions of years of decay of fossilized biological debris, but rather the result of a chemical process that is continually occurring deep inside the Earth, by which new oil pools will continue to bubble up toward the surface where we can get to them, presumably for (more or less) eternity."

We have access to two stars currently. The sun and the molten star that makes up the core of this planet.  The second star drives the creation of oil.

AGuy's picture

Not Dinosaurs, but microbes that lived during their era. Oil deposits accoumulated from anarobic microbes that died and settled to the bottom of shallow seas. This was a slow process that took millions of years. Over time landsides covered the them over and seismenic actively moved them deep under ground, where the heat of the earth cooked them into oil and natGas. Oil is found at a narrow band in the earth. Deep enough to cook and convert them into Oil, Deeper deposits are too hot which breaks down the heavier hydrocarbons into NatGas and other light hydrocarbons.

Oil and Gas deposites are not infinite. One Russia guy wrote some papers about abiotic oil. Its equivelent to the 100 mph carborator of the 1950's/1960's that was nothing more than an urban legend. But people want to believe because its a way to avoid confronting difficult facts.

The fact is that Oil is beome difficult to extract: ie Deep Water, Shale Oil, etc. Oil Majors invested Trillions to find and extract Oil and NatGas. If it was infinite and cheaply available surely they would not have spent Trillions to extract it.



scrappy's picture

They lie about everything else, why not oil?

Reminds me of the "value" of diamonds, when most are locked away in DeBeers vaults.

Actually, it also reminds me of gold, lots of gold on Thailand and Indias buildings, how much?

Where else, what else, do we really "know?"

Based on "official" statistics?

Gold, Professor Thomas Gold.


The mystery of eugene island 330


Ever hear of Gull Island, or Russian deep deep drillin?

False scarcity = more profit.  Duh.


kedi's picture

There may be very limited instances of hydrocarbons being created from surrounding materials. Then you also need the right geology to trap and concentrate those hydrocarbons. Heat and pressure can force different compounds to separate and accumulate. But the big oil and gas deposits are almost always found, where ancient oceans used to exist. The biological material died and layered up on the ocean bottom. As the ocean dissappeared due to plate movement/lift etc. That area often got covered with more mineral rich runoff from rivers. Putting layers of other material over all that dead biological ocean material. The material compressed, cooked, trapped. Biological material is complex. It cooks into complex hydrocarbons. Oil. Oil cooks to gases too.

There may be instances of abiotic hydrocarbons. But the vast majority is biotic.

By the way. I work for a seismic exploration company. We look for oil. There is a very well proven method of where to start looking. I am in Alberta Canada. Across the middle of Canada and the U.S., long ago, there was an ocean. No surprize there is oil in that area. The trick is to find the wrinkles in hard layers that formed over that ancient ocean. The high points of those wrinkles trap the oil and gas that oozes upward into those traps.

ACES FULL's picture

I would like to hear more from you on your opinions about oil reserves left.

gregga777's picture

Geologic processes work over geologic time scales of tens of millions to hundreds of millions of years. It is possible that today's depleted oil reservoirs will refill over the course of the next several hundred million years. They will most assuredly not refill quickly enough to be of any benefit to us or our descendants.

thebigunit's picture

They will most assuredly not refill quickly enough to be of any benefit to us or our descendants.


There is evidence of oil resevoirs in the Gulf of Mexico refilling.

Geologists really don't know how deep oil resevoirs go.  Once they find the top of a resevoir, they start pumping.  No need to find the bottom.

kedi's picture

Some deposits can refill. Depends on the geology. They don't make more oil though. Existing oil in the surrounding area seeps in. If the conditions are right.

Escrava Isaura's picture

Oil doesn’t come from fossils. Oil comes from diatoms/phytoplankton.

And stop watching television and commenting, Consuelo. You have no clue of what you're talking about.... Well, at least about oil.




Urban Redneck's picture

I seem to recall asking a geology professor many years ago to write out the chemical reaction in which crude oil is formed.

What he wrote on the chalkboard was a complex but crude rendition of the underpants gnomes' formula for profit.

Until I see a valid formula I will continue to claim that oil can come from meteorites (which really aggravates some of the abiotic folks), given the correlation of oil bearing anticline traps to meteorite impact sites...

Leftist douchebags and oil geologists might like to worship at the altar of Hubbert, but perhaps they should get down on their knees and suck some serious shyster schlong, since without lawyers declaring vast swaths of the earth's crust off limits for oil extraction (actually due more to boundary disputes than tree hugging, but regardless more land than God himself has declared off limits due to inhospitable climate).

Urban Redneck's picture

Apparently that was above both the pay grade and the IQ of the local oil experts.

What is depleting, and much faster than proven oil reserves, is proven industry knowledge in the ZH peanut gallery across the most critical industries to world peace and economic development.

runningman18's picture

If that were true then why is their pure liquid hydrocarbons (oil without impurities) on Saturn's moon, Titan?  There's probably no phytoplankton or dinosaurs in space:



kedi's picture

Each planet/moon has variables that attract, repel, distill, concentrate, all sorts of things. Earth has had the addition of life. Living things use various elements, compounds, in different ways. Turning them into different things. Since it's creation, the Earth has had various compositions of atmosphere, liquids, in varying amounts. Life had a huge effect on the evolution of the Earth.

Other planets and moons, basically have their gravity, temperature and location as the major drivers of the composition of their liquids and gases. They can settle into a very steady state. No ever changing life forms to convert and redistribute the elements.

runningman18's picture

The assumption by peak oil people though is that oil is only created ONE way - the breakdown of living organisms. The truth is that oil can be created through abiotic means. All the same elements and chemical processes on Titan are also on Earth. If it happens on Titan, it can happen on Earth. They are just rocks in space with similar chemicals interacting all over them. They are not all that different. The bottom line is that the peak oil ideologues don't account for all factors and base their conclusions entirely on assumptions fostered by junk science that come to one conclusion, and remain satisfied even though that conclusion leaves many things unexplained. Plus, none of them can show where demand is not being met, so their whole argument becomes an exercise in placing bets - they bet that cheap oil will run out by such and such a time, and their bets keep changing.

kedi's picture

If it happens on Titan, it can happen on Earth?

At a certain time in Earth's life. It might have. But Earth is in a very different situation than Titan. It is quite obvious, comparing the current situation on Titan, with that of Earth. That things operate differently. Massively differently.

It is not reasonable to describe production and location of hydrocarbons on Earth, in the same way as Titan.

Also. The "oil" on Titan is not like Earth oil. You can actually find markers in Earth oil, that reveal it's method of creation. The oil on Titan is a bit of a misnomer. It is a much more pure conglomeration of elemental items. Things that never got cycled through a biosphere such that Earth has. Just check out the temperatures and such on Titan. -290 degrees. The hydrocarbons that distilled out of the conglomeration of the moon. Did not boil off due to higher temps. The cold temps reduced the ability to convert the hydrocarbons "oil" from evaporating or combining with other things.

-290 degrees. Less gravity. No life. So many differences. No comparison to Earth conditions and methods for "oil" production.

kedi's picture

Plus, none of them can show where demand is not being met?

Demand was being met by extracting oil in ever more difficult ways. The only reason the current glut is happening. Is that Saudi Arabia opened up the flow on one of the worlds biggest reserves of cheap and easy oil. They did that, because other more expensive oil deposits were being opened due to cheap financing and high oil prices at the time. Also, lax banking risk taking.

If you are willing to pay for it. There is oil to be had. At some point, we will be manufacturing and paying for, very expensive "oil". While building and using alternatives to that expensive oil. And finally. We will develop cheaper ways to create hydrocarbons, to fill the small niches that remain for their use. Balance.

In the meantime. There are all sorts of political, scientific, economic and other dynamics, fighting for and against, the ongoing settling towards a stable reality.

That reality being. Renewable energy production. Recycling what we produce with that energy. Living within our means. Economically, socially, politically.


ACES FULL's picture

So Saudi Arabia was of course very happy with higher oil prices until those high prices along with easy credit gave birth to the shale/tight oil revolution. Then Saudi decided to increase production and take less money for their oil in order to squash competition and hold onto market share? Does that sound about right? Please add any thoughts you have. Its very nice hearing from someone intelligent AND on the inside of the oil industry.

The central planners's picture

If we run out of oil there is still plenty of hydrocabons in jupiter's moon titan but according nasa the only exist organic life on planet earth so... where tha fuck all that hydrocarbons came from?

Batman11's picture

We just need the aliens to come back and top up the oil reservoirs again.

That's how it got there in the first place isn't it?


VWAndy's picture

 Peak oilers = another flavor of koolaid.

bid the soldiers shoot's picture


A world class denialist will keep on denying even after 3 or 4 shovelfuls of dirt hit the lid of the coffin they are in.

VWAndy's picture

 Yep you got lots of work to do. On yourself.

DrCassandra's picture

Thanks Kurt for that clear and concise summary. I could not fault it.

51.9Percenter's picture

There are bigger things to be concerned about that oil. We are running out of things we don't even think about such as helium and chemicals we use for electronics. 


The key to everything IMO is science. Give them, the universities, the money they need to experiment. 

VWAndy's picture

 Please these are the people that invented safe spaces.

51.9Percenter's picture

Aye and they also invented/discovered graphene and a bunch of other cool stuff. 

VWAndy's picture

 Like global warming and political correctness.

Itinerant's picture

Yes, but no helium or phosphor. Though there's plenty of helium in the sun

itstippy's picture

Factions of the School of Liberal Arts invented Safe Spaces.  Specifically, the Social Sciences and Political Sciences Departments. The Literature and History Departments know better.

The Schools of Math and Science Departments were busy working on new forms of Zyklon B and advanced delivery systems.  They have a different vision of what might be a "safe space".

fishpoem's picture

Here's a better idea. A massive armada of C-130Js parachuting trillions of condoms over India, China, sub-Saharan Africa, and, of course, the Vatican.

smacker's picture

"The term "peak oil" simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines."

I seem to recall we had a Peak Oil article last week ...

Coming from OilPrice.com, that's not a very accurate definition. Peak Oil was always described as the end of maximum output of "Easy Oil" in any oil well. Cheap and easily recoverable oil if you prefer, approx the first 40%-50% of its total contents. That is the plateau referred to.

Once that plateau point has been reached, the cost of extraction of what's left in the well becomes progressively more difficult and therefore more costly. Output reduces. Increasing amounts of high-pressure water are needed to force the sticky heavy oil loose for pumping to the surface. As the well moves towards exhaustion, the cost of extraction becomes prohibitive and the well is abandoned.

As I've said and this article says, Peak Oil is not the end of oil. It simply means the cost per barrel increases. Obviously different wells are at different stages of their life.

Escrava Isaura's picture

Glad to see that you got it.

“Energy Return on Energy Invested”

That’s the crux of the problem that we’ll be facing.



smacker's picture

Well, I got the message on EROEI a l.o.n.g. time ago ;-)

Yes, you're right. I've also said many times that as EROEI deteriorates and the price of oil rises inexorably, the world will struggle to maintain GDP levels. At some point along that road, economic activity will suffer badly and will fall back into recession,,,unless mankind gets off its butts and finds replacements for oil.

Now is already past time to start that process in earnest...

Boxed Merlot's picture

...“Energy Return on Energy Invested”

That’s the crux of the problem that we’ll be facing...


As long as a kernal of grain planted returns "30, 60 or 100 times"* what was planted, man's continued existence will likely occur. It may not be in the most desirable fashion or with the fairness one would like to see, but humanity will survive as long as we have those among us willing to have the faith to plant seed and able to cultivate, harvest, distribute and secure the gains earth's cycles provide.


History has shown we can even survive the theft, misallocation, stupidity and other wanton wastefulnesses suffered at the hands of the faithless because of the innate bounty the earth's system of return provides.


*  Mark 4:20  https://www.biblegateway.com/passage/?search=Mark+4:20&version=KJV



bid the soldiers shoot's picture


You pulled the same quote from the article that I did:

"peak oil" simply means that crude oil production for any field, region or country eventually reaches a peak or plateau from which it inexorably declines. 


I have always thought the peak oil was best defined as "when annual crude oil production falls below annual crude oil demand.  Which allows for a drop in consumption or a new find or synthetic discovery to temporarily end 'peak oil'.

I appreciated this article very much as it expressed the importance and intellect of M King Hubbert.  Also that at some time 1956 while Hubbert was speaking at the University of Chicago, I was just a few blocks away at the University of Chicago High School, prolly having to write something 100 times on the blackboard.



smacker's picture

The two conditions are related because of Hubbert's Curve. Peak Oil (cheap to extract, Easy Oil) refers to the peak of supply of this cheap oil and happens approximately <50% thru its life. It's followed by a plateau of peak production and is followed by a falling off of supply which creates the issue you raise. But that occurs after a well goes up one side of Hubbert's Curve, across the plateau and down the other side when output becomes more expensive and output drops until it eventually dies.

There are geological limitations on how much oil can be extracted from a well over a set period of time. Matt Simons reckoned that Ghawar was being over-extracted in the 90s and early 00s and a well can collapse if over-extracted. He also claimed it had peaked due to the high water cut. He mysteriously died not long after (!)

PO is an oil supply phase related to each individual well, it has nowt to do with supply/demand per se which is influenced by and a consequence of global overall supply from many wells and consumer demand.


bid the soldiers shoot's picture


Poor Simons.  But everybody knew the Saudis had declared their reserves to be a state secret.  Maybe a suggestion from the US.  There has been lots of talk this century that the Saudi wells were tapping out.


I can't say that I agree with you that Hubbert's PO "is an oil supply phase related to each individual well."  There are oil fields of scores of wells that share pipes and storage tanks and transportation to market.  A field produces a combined supply and meets demand at the market.


 'The Health of Nations'.

If PO is like anything, it is like the Balance of Payments.  a) If a nation produces more exports than it buys imports, it has to raise less money through borrowing and can collect less taxes from its citizens.  If a nation produces more oil than it imports, it's exports will be larger and it is likely to have a positive balance of payments like the Gulf States. {see a)}.

A deficit in PO is more severe. c) if a nation consumes more oil than it produces, without a major find or destablizing oil rich nations like Iraq, Libya, Iran and moving that nation's producers into their oil production, that nation will be doomed to spending money for the necessity of oil.  Without any assistance, a PO oil nation will have to print money to pay for its oil or destroy the infrastucture of oil rich nations and finagle their oil...  

Wait a minute....  


smacker's picture

"There are oil fields of scores of wells that share pipes and storage tanks and transportation to market.  A field produces a combined supply and meets demand at the market."

I won't argue on that where a number of adjacent wells share pipes and storage facilities etc. But an individual well remains an individual well and will be subject to its own individual Hubbert's Curve and therefore its own useful life. I'm referring here to wells that are clearly seperate from each other but adjacent, not a large well that has multiple access points like Ghawar.

"Health of Nations"  <- Agreed.

Plenty of people claim that the M/E wars are about control "of what's left".

As I recall, it was in the 70s or 80s when Opec mandated oil production quotas based upon members' "proven reserves". That lead to every M/E Opec member falsely raising its "proven reserves" to claim a higher output quota. It meant that the figures of "proven reserves" were nonsense and they became a state secret like in Saudi. "OPEC oil quota wars"

That is what Matt Simons unravelled by looking at the water cut from data leaked to him. He said that any well which has a water cut of 50% or higher has peaked. Ghawar was running with a water cut of about 55% at the time, so he claimed it had peaked.

He was trying to get an accurate handle on global Peak Oil. "Peak Oil chart"

I also think that Saudi's active involvement in geo-politics is because they are trying to find a new role to survive, having read the writing on the wall regarding their own diminishing dominance of global oil supplies. The alternative for them is to become a sandpit with nothing but palaces, and the rulers don't like that idea.

Infield_Fly's picture
Infield_Fly (not verified) Jul 24, 2016 1:32 PM

Peak oil - yes, the planet is running out of carbon.




But you can bet that producers and big fat fucking gummint like the peak oil bullshit narrative.



kedi's picture

Lots of carbon. A lot less, complex hydrocarbons. There is a big difference.

But... Science is developing some ways to create the complex carbons faster than the millions of years it took for the first batch.

kedi's picture

Peak water too.

We will need to build big infrastructure to hold and distribute water. The current reservoir systems are not enough to make up for all the water we are pumping out of underground aquifiers. More dams. Better water conservation schemes. Which can also be used to generate electricity to replace some fossil fuel energy.

But of course big reservoir structure will run into trade offs with ecological problems they might cause.

Lots of folks on here will say various peak resource scenarios are BS. A lot of those same folks do believe that gold is scarce, limited in it's supply. Which makes it extra valuable. But for some reason, disagree with most other finite supply scenarios.