Fuel for Thought
What is Peak Oil?
Nov 04 2014 Comments 0
The subject of oil is never far from the headlines. It’s a critical commodity, driving industries and even defining global politics. From price predictions to new extraction methods, it’s always a newsworthy topic.
As a natural resource (you can read about how oil is formed here), there is a great deal of speculation around when and how oil reserves will eventually diminish. And it’s hardly surprising: oil is responsible for heating our homes, powering transport and keeping entire economies on track. Oil supply (or lack of) has the potential to affect us all on one level or another - and that’s why peak oil often crops up in important industry discussions.
Peak oil - the basics
Peak oil is a theory surrounding the supply of oil. It’s a predicted moment in time when oil production reaches its maximum rate, before declining indefinitely until reserves are depleted.
The entire concept of peak oil is based on the assumption that there is a finite amount of oil in the earth. The theory states that production will peak when around half of all this oil has been extracted. However, it is difficult to predict with any certainty exactly when this will happen - for two main reasons.
- First up, oil extraction levels depend on demand. The rate of new technology and freshly discovered oil fields will, in part, be determined by the market and society’s demand for it.
- Secondly, it is difficult to predict exactly how much oil is actually in the earth. Scientists can give their best guess, based on facts, figures and history. But as new reserves are discovered or extraction carried out ‘under the radar’, it is problematic to measure how much oil is left in the earth, and how much it started with in the first place.
If the peak oil theory holds true, further growth in supply will be impossible from this point onwards. The difficulty is in agreeing if - and when - this may actually happen.
The experts say…
As with any theory - especially one with such a profound global impact - the peak oil discussion is never far from the news agenda. It has come to the fore again lately, with the tragic death of Total’s CEO in a Russian plane crash. The late Christophe de Margerie insisted that peak oil is imminent. But others disagree, with some experts asking why peak oil has not yet materialised - or if indeed it ever will.
People like energy expert Bill Reinert say that our demand for oil can change - and therefore peak oil is constantly shifting. He argues that during the recession, we learned how to cope with less oil. So it follows that if we do hit a ‘peak’, our demand will simply reduce - extending the lifespan of any existing oil reserves. Simply put, peak oil is based on the assumption that we will always have the same or growing demand for oil.
Whatever the viewpoint, it’s clear that peak oil will be a hot topic for some time to come.
Image Source: Oil Can
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