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The first time geophysicist M King Hubbert predicted a peak in oil supply, he was ridiculed.  However, his prediction in 1956 that US oil production would peak around 1970 was ultimately spot on.  Our production topped in the early 70’s, and has since been on a steady decline, following the production bell curve he illustrated.  If Hubbert’s longer, much more dire prediction, soon becomes reality, we are in for some desperate times.  At that same of his first controversial prediction, Hubbert suggested that worldwide oil production would peak about a half century later, which would ultimately put us near the peak right now. 

Rather than simply running out, oil production for both a single field, a country, and the entire world follows a predictable curve.  At first, production is easy and cheap, and it just keeps growing along with the economies that grow along with it.  However, as time goes on oil becomes harder and harder to extract.  Old fields’ production gradually lessons, and it eventually becomes too costly and energy-intensive to keep drilling.  We are then forced to look to far less attractive sources for it, such as deep under the ocean floor or near the arctic.  Inevitably, far before the oil actually runs out, growing production is unsustainable.  The problem lies in the fact that vast societies are entirely built on cheap, abundant oil.

Now that economic expansion is reaching billions and billions more than ever before (China, India), worldwide demand for oil continues to soar.  With far more people than ever before have access to relatively cheap oil, supply is naturally going to be even tighter.  By the time all these countries show up to the party though, it very well might be nearing it’s end. 

As I write this oil is trading in the $131/barrel range, slightly down from the $138 it jumped to after Morgan Stanley predicted it would breach $150 by July 4th.  Granted, speculators have played a massive role in driving prices this high, and we will probably see a major correction soon.  There’s no way prices should have jumped so quickly, but I don’t believe the long-term march upward is going anywhere.  You won’t hear much, if any, news on the major networks about long-term supply shortages, but I believe we could be observing the early stages right now.  What do you think?  Is this peak oil, or am I way off?  There’s so many different arguments about this, each with valid points.  I’d love to hear yours.

This post continues to follow Planet Greens’ Peak Everything series.

This entry was posted on Tuesday, June 10th, 2008 at 11:18 pm and is filed under Peak Oil. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.