Peak oil is a theory that was proposed by a Shell Oil Company geologist named M. King Hubbert way back in the ’50’s. He successfully predicted that oil production in the United States would peak in the 1980’s and afterward we would not be able to produce any more than a certain maximum level and afterward output would contine falling off despite new finds.
His theory about U.S. peak oil proved to be correct. The U.S. did indeed peak in oil production and ever since the early 1980’s we have had to import most of our oil.
Is his theory of peak oil appllicable to the world as a whole? After all it is a great big world and there has to be lots of oil that has not been found, right?
There are two schools of thought that are vastly conflicting. One, esposed by the for-profit consulting group CERA or Cambridge Energy Research Associates, is that there is plenty oil to go around and if there will be a point of peak oil it will be somewhere in the distant future. Current energy prices seem to agree but there is more to the story.
Recent high oil prices were, in part, due to speculation. Some experts believe that as much as thirty to forty percent of the price of oil, when it was $140 per barrel was speculation. That puts the real price of oil at the height of the economic boom at somewhere around one hundred dollars a barrel which is still high and indicates that there was a problem getting enough out of the ground fast enought to satisfy demand.
Many other experts, such as Colin Campbell of the Association for the Study Of Peak Oil, believe that we are only seeing lower oil prices because of a total collapse of demand, not because oil is plentiful. Once demand returns high prices will return as well.
There seems to be a good argument for that theory. Right now hundreds of cargo ships that would normally be plying the seas with goods are sitting idle in ports. Plastic companies like Dow Chemical are slashing production and there is no market for their product as before when factories were churning out goods containing plastic. Trucking has fell off at least thirty percent and despite low gas prices Americans and the rest of the world are driving less because of the bad economy.
Will high oil prices return and prove the peak oil theory correct? Only time will tell, but if we get it wrong and return to our old energy wasting ways we could be in for a real economic collapse that will make the current one look like a picnic. For more on peak oil see http://www.theoildrum.com and http://www.peakoilstories.com