Peak oil

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The term peak oil, shorthand for 'global oil-production peak', "means that a turning point will come when the world produces the most oil it will ever produce in a given year and, after that, yearly production will inexorably decline due to the structural lack of innovation regarding exploration led by ExxonMobil's 'cheap oil' strategy: global disorder of 'incorporated governance' - budget crime under market pressure.[1]

It is usually represented graphically in a bell curve. The peak is the top of the curve, the halfway point of the world's all-time total endowment, meaning half the world's oil will be left. That seems like a lot of oil, and it is, but there's a big catch: It's the half that is much more difficult to extract, far more costly to get, of much poorer quality and located mostly in places where the people hate us. A substantial amount of it will never be extracted," wrote James Howard Kunstler in Rolling Stone magazine. The Long Emergency, 2005

Kunstler says that the United States "passed its own oil peak -- about 11 million barrels a day -- in 1970, and since then production has dropped steadily. In 2004 it ran just above 5 million barrels a day (we get a tad more from natural-gas condensates). Yet we consume roughly 20 million barrels a day now. That means we have to import about two-thirds of our oil, and the ratio will continue to worsen."

Energy Department consultants warned in 2005 that "the world is fast approaching the inevitable peaking" of global oil production. [2]

The invasion of Iraq

"There is no shortage of self-described whistle blowers on the left who believe that the 2003 invasion of Iraq is the first step in a strategic global plan: secure the oil facilities of what was the leading anti-American oil producer in the Middle East (although, as every American should know, Saddam Hussein was a dear friend when he was fighting Iran). But mainstream journalists -- even investigative journos such as Greg Palast, Seymour Hersh and Michael Moore -- have not come forth with any treatise on this issue.

"Nor is there a 'smoking gun' -- the neocon think tank known as the Project for the New American Century urged President Clinton to overthrow Saddam Hussein in 1998 for security reasons, but mentioned oil only once.

"The only grist for this conspiracy mill is the supersecret conference on energy that Dick Cheney organized in the spring of 2001. Were the assembled oil executives told that the U.S. was considering an war on Iraq as a military response to peak oil? That this war would be precipitated by a pretext that might include a terrorist incident? That authorities would look the other way when they had intelligence that such an attack was imminent?" Source: Voice in the Wilderness Blogspot, December 29, 2004.

A more viable theory is that peak oil rhetoric, which focuses on oil supply and could be "resolved" by simply taking more oil from others or exploring for more, is useful to the Bush Administration because it distracts from the real reason why oil consumption habits must change, that being global warming.

Corporate Takeover: a different kind of "oil war"

"But, more fundamentally, the markets are moving higher and higher because it looks like the world is actually running out of oil. There's been a big dispute about this in the oil industry for a long time; but the Unocal takeover is one example of this. The oil companies can't find more oil, and so they're buying other companies in order to increase their reserves." --James A. Paul, April 6, 2005.

Chevron Quietly Endorses a Peak Oil View

The facts are compelling.

Many of the world’s oil and gas fields are maturing. And new energy discoveries are mainly occurring in places where resources are difficult to extract—physically, technically, economically, and politically. When growing demand meets tighter supplies, the result is more competition for the same resources.

The only energy we have in abundance: Human energy™.

We can wait until a crisis forces us to do something. Or we can commit to working together, and start by asking the tough questions: How do we meet the energy needs of the developing world and those of industrialized nations? What role will renewables and alternative energies play? What is the best way to protect our environment? How do we accelerate our conservation efforts? Whatever actions we take, we must look not just to next year, but to the next 50 years.

Source: Chevron Oil's website page, "Real Issues."

"Geopolitical" Peak Oil

In August 2008, the New York Times explored the issue of "geopolitical peak oil"; the issue being not that the world is running out of oil, but the fact that the majority of the world's remaining oil reserves are not controlled by the oil majors but state oil companies. As late as the 1970s, Western corporations controlled well over half of the world’s oil production. These companies — Exxon Mobil, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total of France and Eni of Italy — now produce just 13 percent.

Where they do have assets, in countries such as Venezuela and Russia, the companies are being forced to renegotiate contracts with recently emboldened national oil companies. The result is that the oil majors are in "crisis," according to Amy Myers Jaffe, the associate director of Rice University’s energy program in Houston. She told the New York Times: "It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors. They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go."

Today’s 10 largest holders of petroleum reserves are all state-owned companies, like Russia’s Gazprom and Iran’s national oil company. "There is still a lot of oil to develop out there, which is why we don’t call this geological peak oil, especially in places like Venezuela, Russia, Iran and Iraq," Arjun Murti, an energy analyst at Goldman Sachs told the paper. "What we have now is geopolitical peak oil." [1]

We Will Reach Peak Oil in Five Years...

In October 2008, a taskforce of eight leading British engineering, utility and transport companies predicted the world will reach peak oil in three to five years. The taskforce looked at three possible scenarios: a collapse in production, a decline, or a plateauing of production once peak oil is reached.

Taskforce chairman, ex-Greenpeace scientist and chair of SolarCentury, Jeremy Leggett, said that even Shell Oil agreed with the third option, although the company is more optimistic about when the plateau will be reached.

According to Leggett: “What we are arguing is that the oil industry and oil institutions have been irrationally exuberant about their ability to meet demand going forward, in much the same way that the financial institutions have been irrationally exuberant about their ability to manage complex financial instruments.”

Leggett told the BBC that the warnings were there, but now was the time to act “What we are saying is let's get this right,” he said. [2]

But IEA Says Oil Will Peak in 2020

For years, the world's official energy watch-dog, the International Energy Agency (IEA) has ignored warnings from credible NGO’s and analysts that peak oil is fast approaching. Just three years ago, its executive director, Claude Mandil, labelled those who warned of peak oil as “doomsayers”. “The IEA has long maintained that none of this is a cause for concern,” wrote Mandil.

In its World Energy Outlook for 2007, the IEA predicted a rate of decline in output from the world’s existing oilfields of 3.7% a year. Even so, in a quite amazing turnaround, in late 2008, the IEA predicted a rate of decline of 6.7 per cent, meaning that oil will peak as early as 2020.

In an interview with George Monbiot from the Guardian, Fatih Birol, chief economist to the IEA admitted that decline rates “were significantly higher” than before. Amazingly he admitted that this year they had done detailed research on a field by field basis and hence come up with the new figure. Before they had only done estimates.

More importantly, it is significant in many ways. The IEA has never before forecast the exact date when peak oil might occur. And even 2020 is now likely to be over optimistic. Also the IEA is expecting that Canada’s dirty tar sands will take up the slack. That is why the IEA is now admitting that we are on an “unsustainable energy path”. [3]


  • "We've embarked on the beginning of the last days of the age of oil." --Mike Bowlin, Chairman and CEO, ARCO (1999), as quoted in the book The Party's Over -- Oil, War and the Fate of Industrial Societies by Richard Heinberg.
  • "My father rode a camel. I drive a car. My son flies a jet airplane. His son will ride a camel." --Saudi saying.

"Peakers" and "peak oil" proponents

"Peakers" are those who subscribe to the belief that the world's oil resources have peaked already. They include:

"We have oil"

Anti-"Peakers", or those who do not subscribe to "peak oil" theory

Related SourceWatch Resources

External links

peak oil: websites

General Information

Reports & Studies

Maps & Statistics

We have oil

  • "And surely the world is running out of oil, right? Wrong! The world has plenty of oil, enough says the US Geological Survey to last for at least the next several hundred years or longer. Worldwide, there are 14,000 billion barrels of crude oil reserves. In its World Petroleum Assessment 2000 report, the global reserves of crude oil were estimated to be some 3,000 billion barrels." --Alan Caruba, February 17, 2005.
  • "As a shareholder I also know that of all the oil ever known to exist in the Texas and Oklahoma oil fields, only one-third has been removed from the ground, with the remaining two-thirds still in the ground. Why? Because it is cheaper to buy Saudi Arabian oil. When the world price of oil goes up, the oil industry will bring their Texas/Oklahoma oil out of the ground. So again, we do not need more oil in America. All we need is already here in capped oil wells." --Sam Booher, a shareholder in ExxonMobil, Phillips Petroleum Company and BP-Amoco Oil Companies and chairman of the Georgia Chapter of the Sierra Club. Oil and Gas Reporter, September 1, 2001.
  • "Officials from Saudi Arabia’s oil industry and the international petroleum organizations shocked a gathering of foreign policy experts in Washington yesterday with an announcement that the Kingdom’s previous estimate of 261 billion barrels of recoverable petroleum has now more than tripled, to 1.2 trillion barrels. ... Additionally, Saudi Arabia’s key oil and finance ministers assured the audience — which included US Federal Reserve Chairman Alan Greenspan — that the Kingdom has the capability to quickly double its oil output and sustain such a production surge for as long as 50 years." Arab News, April 4, 2004.







2004: peak oil: External Links 2004

2005: peak oil: External Links 2005


  1. Jad Mouawad, As Oil Giants Lose Influence, Supply Drops, The New York Times, August 19, 2008.
  2. Press Association, "UK 'faces oil crisis in five years'", October 29, 2008
  3. George Monbiot, "When will the oil run out?", The Guardian, December 15, 2008