The Age of Scarcity

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Introduction to Peak Oil

Depletion Scotland member Phil Hart has created his own easy-to-read, colourful introduction to Peak Oil

Oil Myths And Facts

Q Crude Oil supplies will not run out for at least 50 years. So what is the problem ?

A There is a big difference between oil supplies not running out, and supply meeting demand. Ever since the first commercial oil was drilled in the USA in 1859, oil production has always been greater than demand ie. we have always been able to produce more then we needed (not that we always have, notable exceptions were the Middle East oil crises of 1973 and 1979). However, sometime within the next ten years, global oil production will peak ("Peak Oil"), then production will decrease. It may be that before we reach Peak Oil, global oil demand will outstrip supply. This, indeed, is the real issue.

Q Who are the biggest producers, when will they peak ?

A Of the top 7 oil producers, all have either peaked (USA [1971], Norway [2000] and Mexico [2005]), are expected to peak 2006-2007 (China) or are close to peak in terms of the maximum amount of oil they can produce (Saudi Arabia, Russia, Iran). In other words, for Saudi Arabia, Russia and Iran, oil production can increase, but not by much and not for long.

Q What will happen when global oil production peaks ?

A After Peak Oil there will no longer be enough oil to meet everyone's needs. The price of crude oil will increase (probably substantially) so that demand stays in sync with supply. This will have a knock-on effect in global trade and the stock markets as interest rates start climbing to counteract inflation, as it did in 1973 (when the value of the stock markets fell by 70%) and 1979 (when interest rates reached about 15%). The main difference between then and now is that then we were short of oil for political reasons, now it is because we have to all intents and purposes run out of new oil. If an economic depression sets in, oil demand will temporarily decline, leading to lower oil prices due to the resulting glut of oil. It is questionable whether or not  'alternative' sources of oil, deep water (e.g. offshore brazil, Gulf of Mexico) and Canadian tar sands, could survive economically with lower oil prices.

Q Why will global oil production peak 2005 - 2012 ? Some reports suggest Peak Oil will occur nearer 2025.

A The reason for this difference is because the "optimists" are unrealistic about how much oil is left, and ridiculously unrealistic about how fast we can get it out of the ground, perhaps deliberately trying to mislead because the truth (we really are running out, now) is pretty scary. The discovery of new,  conventional oil reserves peaked in the mid-1960s and has been falling gradually ever since. Taken over the average of a year, we now consume four times as much oil as we find. The oil companies are spending a fortune on trying to find new oil reserves, but the ones that they find are getting smaller and smaller, and therefore produce less oil.

Q What is the situation in the USA ?

A Oil production peaked in the USA in 1970/71. It has been falling ever since so that now it imports more than 60% of its crude oil requirements from more than 15 countries. Interestingly, some of these countries have already peaked (UK, Norway, Mexico) or are about to peak in oil production, so that oil imports will become concentrated in just a few countries. In the longer term, say 10 years from now, USA oil imports will come mainly from the Middle East eg. Saudi Arabia and Iraq, which are apparently the two countries with the largest known reserves.

Q What about the UK ?

A Oil production for the UK (North Sea, west of Shetland) peaked in 1999. It became a net importer of oil at the beginning of 2006, shortly before the peak in global oil production and will effectively run out by about 2020. This will clearly have a major effect on the UK's balance of payments, not to mention loss of income from North Sea oil, and a drop in oil-related jobs. But you will not find any discussion of this in the UK media.

Q Does Saudi Arabia not have huge reserves ?

A Yes it does, but an increasing number of experts outwith (and indeed inside) Saudi Arabia have published articles that suggest Saudi Arabia does not have nearly as much oil as it says it does (apparently, most of the OPEC countries do not have as much oil as they say they do). Indeed, it is very close to peaking. Saudi Arabia's plans for massively increasing its oil production capacity over the next 50 years are generally considered to be a pipedream. Of greatest concern is Ghawar, the world's largest oil field by far. It is thought that it currently produces about 60% of Saudi oil (5 Mbd, more than Norway and the UK combined). It is a very old field (1950), and has continued to produce vast quantities of oil for so long because the pressure is being kept up by pumping in about 8 million barrels water per day from all angles. The fear is that when it declines it will do so very quickly, and may do so soon. Many commentators think that $60 per barrel of oil is too high (its approximate current price). The loss of Ghawar would see prices reach $100-$200 per barrel.

Q What about Russia ? It produces about as much oil as Saudi Arabia.

A The Russians expect their production to increase very slowly, if at all, until 2010-2015. In other words, they are close to peak now.

Q What about Iran ? It produces about four million barrels per day.

A Iran's maximum peak output was about 6 million barrels /day (Mb/d) in 1978. Then the revolution took place and production plummetted to almost zero. It has once again increased but to only 4 Mb/d at present. It is unlikely to reach 6 Mb/d again. Many analysts believe that Iran has reached its second Peak.

Q And China ?

A China is in fact one of the world's largest oil producers. But it has two problems. Firstly, like Russia, its oil production is close to peaking, and is set to decline thereafter. Secondly, its economy is booming and the number of private cars is set to increase from 10 million autumn, 2004 to over 100 million by 2020. So its own oil production is close to peaking, its oil consumption is ballooning, from where is it going to get sufficient oil to meet its increasing requirements ?

Q What about Hydrogen, it has been forecast as a replacement for oil for the internal combustion engine?

A Hydrogen is a non-starter for replacing petrol or diesel. It does power a few vehicles at the moment, but it will never power more than a small fraction of vehicles. The problem with Hydrogen is that it takes more energy to produce it than it actually gives out. We would need to build hundreds of new (nuclear) power stations to supply the energy needed to replace crude oil as a primary source of energy.

Q Are not all Nitrogen fertilisers made from Natural Gas, and pesticides and herbicides made from crude oil ? What is going to happen to food production in the future ?

A Decreasing Oil supplies plus decreasing Natural Gas supplies = a return to organic farming methods. It is the future, we have no choice. No Oil plus no Natural Gas also = no GM (Genetically Modified) crops, they will not grow without their application of chemical fertilisers, pesticides and herbicides. Indeed, various studies have shown that without oil and natural gas inputs (a situation we are likely to reach by 2050), the world is unlikely to be able to feed more than 2 billion people. Others pessimistically suggest no more than 500 million, less than 10% of the current global population.

Current News

Energy Bulletin - Energy News

321Energy - Oil, Natural Gas, Nuclear, Coal, Renewables

The Oil Drum - usually fairly technical, they concentrate on a single topic each day.

The Oil Drum Europe - same format as The Oil Drum

Top 5 Oil Depletion articles

Peak Oil: an Outlook on Crude Oil Depletion by Colin J.Campbell - Overview of the Oil Depletion issue

The Peak Oil Debate: Crisis or Comedy ? [pdf file] - Matthew Simmons challenges the sceptics of Peak Oil with crystal clear arguments

Twilight in the Desert: The Fading Of Saudi Arabia's Oil [pdf file] - Matthew Simmons predicts Saudi oil production is close to peaking

Oil field mega projects 2004 [pdf file] - Chris Skrebowski, editor of Petroleum Review, reviews the big oil production projects currently in the pipeline. There are not many.

How realistic are OPEC's proven oil reserves ? [pdf file] Dr. Mamdouh Salameh suggests OPEC oil reserves are very exaggerated.

Top 5 Oil Depletion web sites

ASPO (Association for the Study of Peak Oil and Gas) - All Newsletters and summary of Oil Producing Countries

The ASPO 2nd International Workshop On Oil Depletion - Conference papers

ODAC - Oil Depletion Analysis Centre - Excellent sections : Bulletin Board, Articles

The Wolf at the Door - The Beginner's Guide to Oil Depletion

Matthew Simmons speeches and papers - Matthew Simmons champions the Oil Depletion debate

Nuclear Energy

Nuclear Energy - Depletion Scotland

Why nuclear power is not the answer to global warming - John Busby

Nuclear delusion. The case for a new atomic dawn to meet the carbon challenge is holed from stem to stern, argues Tom Burke.

Why Nuclear Power Cannot Be A Major Energy Source (PDF, 0.4 Mb) - David Fleming, April 2006.

Oil Depletion and Geopolitics

An increasing number of authors believe that being dominated by oil men and women, the Bush Administration is very aware of the imminent peak in global oil production and is making plans accordingly:

All for Oil - Bill Henderson explains why he thinks the Bush Administration understands Peak Oil all too well.

History will show U.S. lusted after oil - Linda McQuaig says "But buying oil isn't the goal; getting control of it is".

Iran bombing ... the United States 'policy' of oil greed! - Andrew McKillop writes: News breaking today makes it clear that North Korea already has nuclear weapons and intends to keep them -- as insurance against Candy Rice and her King Biscuit Bombing Show, which has a short, two-word basis: Oil greed.

ASPO-Ireland: You can subscribe to the Association for the Study of Peak Oil and Gas Newsletter by clicking here. It is free, delivered to your e-mail address as a link at the beginning of each month.

ODAC - The Oil Depletion Analysis Centre (UK) has two e-newsletters. ODAC News is sent out weekdays, a summary of each day's oil and gas depletion news from the web. ODAC Website Updates are sent out every 1-4 weeks with a summary of new Articles, Bulletin Board items and Events added to the ODAC website. If you would like either of these newsletters, visit the ODAC website.

Conference Proceedings are available on the ODAC web site.

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