How do we know peak oil is here?
On this page…
- The Growing Gap
- The most funded scientific discipline except the military
- 64 out of 98 oil producing countries have already peaked
- Non-OPEC oil
- OPEC oil
- Why doesn’t the USGS see this?
- A growing body of geologists and scientific celebrities
- Expensive exploration
- The problem of exponential growth
- Big Oil have denied accurate peak predictions before
- Still not convinced?
1. The Growing Gap
I think most people would be horrified if they understood the graph above and knew that there has been a 40 year downward trend in oil discovery, and in that for the last 27 years we have burned more oil than we have found. In 1983 discovery trends dropped below consumption trends, and we started eating into old oil that our grandparents discovered, without replacing it with as much “new oil”. We now burn about 5 barrels for every barrel we find! This is even acknowledged by the peak oil denial camp such as Exxon Mobile. You can see their version of the Growing Gap Graph from Vice President Longwell’s own report (download PDF here).
For 25 years we have been building vast suburban sprawl based on the lie that “there is enough oil”. It shows what an idealist I am that I expected governments would have started thinking about a post-oil plan back when it became obvious that we were not finding the oil fast enough to replace the oil we have been burning.
2. The most funded scientific discipline except the military.
Now consider this. According to the ABC peak oil documentary Crude (May 2007) more money has been pumped into oil science than any other scientific discipline — except maybe military science. Over time we are talking about a trillion dollar business that wants to maximize all areas of potential profit making — and it all starts with finding the oil fields in the first place! If they cannot find the oil… who can?
We now burn oil at the rate of about a thousand barrels a second. A rough back-of-the-envelope guesstimate says we are falling behind at the rate of about 800 barrels a second. This single fact should guarantee an oil crisis, sooner or later. But it gets worse.
3. 64 out of 98 oil countries have already peaked.
Wikipedia tracks national oil status on their Oil Reserves page. Please check the wikipedia page on as it is updated as new developments and reports come to light. Basically, 54 of the top 65 most important oil producing nations have already peaked. For even more comprehensive detail check David Strahan’s interactive oil atlas that shows ALL oil producing nations — even the tiny insignificant producers — and clearly shows that out of ALL 98 nations, 64 have peaked.
Now, obviously not all oil nations produce exactly the same amount of oil. If they did, then logically we would have passed peak oil when 49 of the 98 oil nations had peaked.
Instead, we live in a world where just 1% of the world’s oil fields are super-giants that produce about 50% of the oil. It’s when those super-giant fields go into decline that the crisis will hit, and many of those are in the middle east.
4. Non-OPEC oil.
World oil production is roughly 50/50. OPEC provides about half the world’s oil, and non-OPEC produces the other half. So how are those 2 halves of the oil world going, when we consider that 64 nations have already peaked? Who has the oil? What do the energy officials say?
Guy Caruso put it this way (American DOE’s Energy Information Agency) — on ABC’s 4 Corners in 2006.
GUY CARUSO, US DEPT OF ENERGY: Definitely. The Gulf states will contribute by far the largest share of the increase in – in our outlook over the next 20 to 25 years. We’ve got more than 30 million barrels a day of growth in world oil demand, and about 10 of that will be this unconventional liquids, oil sands etc. But the majority of the rest of the growth will be from the Gulf countries.
To put it simply, the 20 thousand scientists at Exxon Mobile — who deny an imminent global peak — have announced that the entire world outside of OPEC is about to peak in its production of all oil categories! Listen to how the Bulletin of the Atomic Scientists reviewed this quiet Exxon announcement.
Second, the majority of non-OPEC producers such as the United States, Britain, Norway, and Mexico, who satisfy 60 percent of world oil demand, are already in a production plateau or decline. (All of ExxonMobil’s crude oil production comes from non-OPEC fields.) Third, the production peak cited by the report is quite close at hand. If it were twenty-five years instead of five years in the future, one might be more skeptical, since new technologies or new discoveries could change the outlook during that longer period. But five years is too short a time frame for any new developments to have an impact on this result.
Even Russia says they will peak by 2010! This means that the world will be utterly dependent on OPEC for any increases in production. The geopolitical and economic implications of this fact alone are quite profound, even if world peak oil were decades away. Yet how is OPEC doing, and are they telling us the truth?
5. OPEC oil
A special op-ed edition of the ABC’s 4 Corners raised serious questions regarding OPEC reliability. If anything 4 Corners illustrated one insane fact: we trust OPEC when they will not allow independent audits of their fields! (Please watch their free online 45 minute documentary.)
Guy Caruso of the US Department of Energy (DOE) highlighted our complete dependence on OPEC:
“Definitely, the gulf states will contribute by far the largest share of the increase in our outlook over the next 20 to 25 years”…. “the majority of the increase will be from the gulf countries.”
Yet as the DOE’s own oil consultant, Robert Hirsch, clearly states:
“Basically what they are asking us to do is to trust them. And frankly on something that’s the lifeblood of our civilization and the way we live, to trust somebody who won’t allow any audits is extremely risky. I personally don’t believe the numbers that are out there.”
Robert Hirsch is not some end of the world doomer. He’s a smart cookie, who has developed key strategies in fusion energy. He’s a serious, sceptical scientist keen to solve the world’s energy problems with real solutions. And he does not believe OPEC’s reports, and basically thinks we could be heading into a Great Depression. (See the Hirsch report).
As Reuters stated January 2008: Tough to pump more oil, even at $100
Oil at $100 a barrel should give exporters every incentive to pump more, but their difficulty in doing so shows the world is struggling to sustain production…. “OPEC can do little,” Shokri Ghanem, the top oil official for OPEC member Libya, told Reuters. “Most OPEC countries are producing at capacity.”
No independent audits
Why is he so sceptical? Because the USGS, EIA, IEA, DOE and other oil bodies have no way of verifying OPEC data. They just trust it. The non-OPEC world is about to go into decline, and we are OK with OPEC’s attitude?
The infamous 1985 reserve upgrades.
These countries had been thoroughly explored for 30 or 40 years when all of a sudden they practically doubled their reserves. Why? What had those geologists been doing for 4o years, playing cards? What happened? As the Wikipedia oil reserves page makes clear under the heading Suspicious official estimates of oil reserves from OPEC countries
The OPEC countries decided in 1985 to link their production quotas to their reserves. What then seemed wise provoked important increases of the estimates; in order to increase their production rights. This also permits the ability to obtain bigger loans at lower interest rates. This is a suspected reason for the reserves rise of Iraq in 1983, then at war with Iran.
In fact, Dr. Ali Samsam Bakhtiari, a former senior executive of the National Iranian Oil Company, has stated unequivocally that OPEC’s oil reserves (notably Iran’s) are grossly overstated. In a recent interview  he stated that world oil production is now at its peak and predicted that it will fall 32% by 2020.
What happened? The money spoke louder than the geologists. Their ability to earn was tied to the size of their books. Magically, the oil in the books grew doubled when there had already been decades of surveying the oil in the ground.
Saudi Arabia — the King of OPEC — is about to die.
The undisputed king of all oilfields was Ghawar. It’s massive. This one individual oil field was worth 10 North Sea projects — that is the whole North Sea with all it’s different oil fields. Watch this Wiki because it looks like they may have peaked. However, we may have a few years left. The former head of Saudi exploration has stated to the New York Times that he believes Saudi oil will peak at about 12.5 to 15 million barrels a day. After that point, there can be no more growth in supply no matter what the world demands! When Saudi Arabia peaks that’s it, the world has peaked! From the article…
“When I asked whether the kingdom could produce 20 million barrels a day — about twice what it is producing today from fields that may be past their prime — Husseini paused for a second or two. It wasn’t clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No.”
In other words, Saudi Arabia peaks in the next few years. When Saudi Arabia peaks, that’s it, the world has peaked. “The king is dead, long live the … what?” (Nothing can replace oil as a liquid fuel in the time frames we need.)
6. Why doesn’t the USGS see this?
Given these statements, why are the USGS so sure the world has a lot of oil? The USGS advise the United States DOE’s Energy Information Agency, which in turn advises the US Government on energy matters. It’s like one big daisy chain that, when the crisis hits, will let everyone in charge to pass the buck and say, “But I thought they knew”. I can’t be bothered to look up the historical circumstances that allowed the coalface of oil investigation to become so separated from those in charge, but it does seem to add to the “plausible deniability” that perpetuates business as usual… even in the face of $130 dollar a barrel oil!
Guy Caruso trusts the USGS methodology. What is that methodology? Basically the USGS developed a method of “guessing” how much oil was in the world which seemed to work pretty well up until global discovery peaked in the 1960’s. They wanted a method of “counting” the oil they had not found yet… and before American oil discovery peaked, they seemed to be finding oil faster than they were burning it! (It must have been a heady time for oil hunters, making big “kills” all the time like that!)
So what they came up with was the probability method. We have P5, P50 and P95. The P stands for “Probability”. So P5 stands for only a probability of 5% or a 1 in 20 chance of that oil being in the ground, P50 is a 1 in 2 certainty, and P95 is 95% certain that the oil is in the ground.
It worked well in the expansionary age of discovery and production, but has not really been accurate for about 40 years since global discovery peaked in the 1960’s. Yet they stubbornly hang onto this methodology because it gives more comforting results.
Now with a growing number of geologists and troubling reports coming out, I would have though all energy agencies would have been broadcasting and counting ONLY the stuff we KNEW was there with near certainty… the Probability 95% or P95 oil.
That’s not what they do! In a world with ever more nations peaking and going into permanent decline, the USGS keeps assuming that the discovery trends of the first half of the oil age will continue (ignoring the discovery trends of the last 40 years!)
OK, hold onto your hats. In layman’s “peak oil for dummies” terms, this is what the USGS does. They still take the P5 odds and mix them with the P95 and then hey presto! That’s how much oil is in the world.
In other words, let’s imagine some USGS dude in a particularly optimistic frame of mind — maybe he’s just met a nice girl — suggests a 5% chance that there’s 4 trillion barrels of recoverable cheap oil in the world, and a more hard nosed USGS guy says no, there’s only 2 trillion barrels of oil in the world, and then rather than trusting the hard nosed rational guy with numbers that are conservative and fairly certain, they mix the optimists guess in and come up with 3 trillion barrels…. and leave it kind of open ended, just in case there’s more anyway!
In a world with the leaks coming out of OPEC that I’ve mentioned above, do you think that’s a good way to advise government on oil security? Let an agency 2 or 3 degrees of separation away from those actually making energy policy decisions then play with numbers like that in some think tank?
W. Zittel, J. Schindler, L-B-Systemtechn wrote: The Countdown for the Peak of Oil Production has Begun. This report documents the problems I’ve highlighted above. It is well worth the read as it details the fallacies behind the leading energy advisors to the world. Do not miss it! Even if you are a newcomer, read it, then read it again to get your head around the ridiculous and easily verifiable “methods of madness” in the leading energy agencies.
7. A growing body of geologists and scientific celebrities
OPEC have already said that light sweet crude is in decline. (Only the sour stuff was still increasing in production at the time of this report, and that now may be in doubt.)
Chevron have said it! “The era of easy oil is over!” writes the CEO at willyoujoinus.com
OPEC now seem to be discussing an imminent peak!!
Matt Mushalik (Engineer) developed this graph to illustrate bands of “peaked status”. Just visually look at the volumes already in decline compared to those still increasing…. it becomes clear that there is a problem.
Finally, this one really does it for me. The graph shows how Saudi Arabia are running faster just to stand still. Look how the rig count is going through the roof while their production is falling. It reminds me of the preview to Asleep in America where Professor Kjell Aleklett of ASPO explains, “When the big Russian oil field went into decline, they needed 200 smaller oil fields to replace it.” The biggest field in the world is Ghawar in Saudi Arabia. If Ghawar has peaked, then the world has peaked, pure and simple. More on Saudi Arabia at “The Oil Drum”.
Chris Skrebowski (wikipedia)was once a critic of the peakniks. He is now a peaknik himself, starring in the ABC’s Four Corners. He keeps updating his “Megaprojects review“. He summarizes his concerns in this interview at GPM. Chris is Editor of the UK’s prestigious Petroleum Review.
ASPO also have the latest news — check ASPO international and the ASPO for your country.
8. Expensive exploration
From the Sanders Research institute, June 2007.
(Behind free subscriber wall, well worth it.)
Finding oil has become extremely expensive and risky.
Crude oil deposits formed over millions of years within the Earth. Major oil production began only a century ago. The United States reached peak oil in 1970 and annual oil production has gradually fallen in half. Current production would be far less if not for new discoveries in northern Alaska and the development of offshore oil fields. The United States is the world’s leader in oil exploration and development, yet oil production in the USA continues to decline. Everyone agrees that world oil production will peak one day, and there is no method of importing oil from other planets.
If abundant oil deposits are available:
- Why are oil companies investing billions of dollars for complex and risky attempts to produce oil from deepwater wells?
- Why attempt to develop fields in the frozen arctic or build billion-dollar oil platforms in the hurricane pathways in the Gulf of Mexico?
- Why are oil companies risking billions of dollars and the lives of their workers in some of the world’s most hostile nations, like Sudan and Iraq?
- Why invest billions of dollars on oil projects in countries like Russia, which often impose massive “pollution” fines on foreign oil companies?
- Why invest in nations like Venezuela that impose huge royalty taxes on existing foreign oil wells?
- Why deal with nations like Ecuador that just revoked licenses and seize developed fields?
- Why deal with Iran and its uncertainties?
9. The problem of exponential growth
Exponential growth in oil demand from economic growth and new players like China and India means a LOT more oil is needed. People just do not think much about the power of exponential growth. See my page on the SPEED of Growth to find out how fast a regular percentage increase each year in the consumption of oil will DOUBLE the annual consumption of oil, and comments on this phenomenon by Jimmy Carter and more recently by the Australian Federal Peak Oil enquiry.
10. Big Oil have denied other correct peak oil predictions
The charge has been made that peak oilers have made many mistakes before when predicting the worldwide production peak. However, just as some prior warnings may have been overly alarmist, does that mean all such predictions are wrong? Also, just as some peak oilers might have ulterior motives in, say, publishing a book and making some money, does that mean all peak oilers can be tarnished with the same brush?
Can you imagine a teeny weeny motive that might also bias Big Oil reports on this issue? Imagine that the international community suddenly and dramatically took peak oil warnings seriously, and started to shift entire economies off oil. Can you imagine how many hundreds of billions of dollars profit are at stake? It is in their interest to maintain our addiction at all costs. They are crack dealers hoping their users don’t go cold turkey. They are corporations addicted to the dollar now, whatever the long term cost. At least those at the top are — many working for Big Oil have no idea of the real perils involved in the world production picture.
So, have Big Oil ever tried to silence or dispute previous peaknik predictions?
In 1956 M King Hubbert predicted that America would peak in 1971.
Shell tried to cover up his paper and changed his conclusions, and the USGS director led a campaign against Hubbert. They played all the usual games of inflating reserves, etc to give a much later peak — but Hubbert was right. The USGS director was eventually fired for his stupidity.
The North Sea
Matt Simmons writes:-
In 1995-96, I started talking about giving speeches in Aberdeen and Stavanger at the North Sea Oil Show saying, the North Sea is just about to peak and go into irreversible decline and I get these astonished looks by senior executives of the major oil companies saying, “Matt, you don’t understand technology.” Well, it turned out that I didn’t ever say 1999, I said in the next two or three years. 1999 was the high water mark for the North Sea, and it is already down 25%.
Roger Blanchard also had a go at the North Sea. This implicates the US DOE/EIA and the USGS (whose figures the DOE/EIA based their assumptions) over estimates of North Sea URR. Denial everywhere — and yet now it’s history.
11. Still not convinced?
Even if you still do not believe an early peak has been categorically proved, I hope that this introduction has at least given you a sense of the heated debate amongst petroleum specialists. Given the importance of oil to the world economy, I am amazed that this geological debate has not already resulted in a bipartisan international inquiry. That is what we are asking for. It makes sense, doesn’t it?
So even if you are still unsure, does not the very fact that we are unsure about the lifeblood of our economy compel action? Are we all to remain unsure about our most important resource? Are we to blunder along in the dark?
The peak oil community is asking for nations to sign the Oil Depletion Protocol, part of which calls for a full audit on ALL oil producing nations so that we can establish reserves and the expected depletion rate.
Critics often tell ‘peak oil alarmists’ that they are ‘the boy who cried wolf’. Yet there are 2 morals of that story. Yes the first moral is don’t create false alarms or people may not believe you when it counts. But many overlook the second moral of the story — when someone does cry wolf go and check or people die!
I hope that as you read the reports above you will have a curious mind with a coffee ready, and time for lots of data. Be ready to listen to senior geologists with lifetimes of experience in oil production. It is enough to convince me of the need for a massive oil audit and international agreement such as the Oil Depletion Protocol.