Peak Oil

An introduction to the concept of Peak Oil

Peak Oil is defined as the point in time when the maximum rate of global petroleum production is reached, after which the rate of production enters a state of decline. It has nothing to do with the amount of oil still in the ground, it’s all to do with the rate it can be got out of the ground. Many oil industry experts believe this point was reached sometime between 2005 and 2008. Even the most optimistic accept it will be with us by 2015 at the latest. Because production statistics are often treated as state secrets (especially in the Middle East), the true situation is something which can only be determined “in the rear-view mirror”.

Most observers agree that the peak of conventional crude oil production hit its peak in 2005, at just over 74 million barrels per day (mbpd), at which level it has pretty much remained. The level of consumption has for some years been well over that and the gap is made up by “unconventional liquids”, such as natural gas liquids, “extra heavy” oil, synthetic oil made from tar sands, refinery gains, liquids produced from the conversion of coal and natural gas, and biofuels. Oil produced from algae or ethanol from cellulose (Cellulosic Ethanol) both still look as far in the distance as they did five years ago, as no one has yet figured out how to produce either one at commercial scale or with an acceptable net energy return. In the same way as with conventional crude production, we can’t know for sure when the supply of “all liquids” has peaked until that date is also well behind us.

Not coincidentally, the current record flow rate for all liquids production is around 87 mbpd, which occurred along with the oil price peak in July 2008. The global recession has reduced world oil consumption from the peak seen in 2008 to just under 85 mbpd by the end of 2009 – but that is already up from the financial crisis-induced dip in the first half of 2009. Any future growth in consumption from China or India will rapidly cause us to be knocking on the production ceiling again. For more information on the subject of peak oil, click here.

Data updated February 2010

UK Industry Task-Force Report

On 10 February 2010 at the Royal Society in London, six UK companies – Arup, Foster+Partners, Scottish and Southern Energy, Solarcentury, Stagecoach Group and Virgin – joined together to launch the second report of the UK Industry Task-Force on Peak Oil and Energy Security (ITPOES).

The report, titled The Oil Crunch – a wake-up call for the UK economy, finds that oil shortages, insecurity of supply and price volatility will destabilise economic, political and social activity within five years.

The Task-Force warns that the UK must not be caught out by the oil crunch in the same way it was with the credit crunch and states that policies to address Peak Oil must be a priority for whichever new government is formed after the 2010 election.

Here, two members of the UK Industry Taskforce for Peak Oil and Energy Security, Will Whitehorn from Virgin Group and John Miles from Arup, describe the oil crunch and its implications for the UK:

The Oil Crunch report can be downloaded here

Movies about Peak Oil

The documentary movie Blind Spot was released in 2008. Here, in an excerpt from that film, Prof. Albert Bartlett gives his view on our consumption of finite natural resources:

From the movie’s DVD cover: “Blind Spot is a documentary that illustrates the current energy crisis that our way of life is facing. Whatever the measures of greed, wishful thinking, neglect or ignorance, we have put ourselves at a crossroad which offers two paths, both with dire consequences. If we continue to burn fossil fuels we will choke the life out of the planet and, if we don’t, our way of life will collapse.”

There is more information, excerpts and trailers at the film’s official website:

Interview segment originally reproduced on YouTube with permission of the producers, Dislexic Films.

[Editor's Note: Those who query what connection this page has with environmental issues should consider this: the increasingly evident oil shortage will provide many more pressing reasons for us to cut back on oil use and thus on carbon emissions than any agreement reached in Copenhagen. At present, the temporary reduction in oil consumption due to the global recession has caused a short-term surplus and hidden the seriousness of the situation from most people. However, as the major world economies start to grow again, the shortage will be unavoidable and rapidly become critical. With the honourable exception of The Independent in January 2006 ("What they don't want you to know about the coming oil crisis"), the serious press are only just beginning to pick up on the issue - for example, the Guardian's economics correspendent Ashley Seager has addressed the Peak Oil problem in an article under the subheading "Dwindling supplies and no plan B".]

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