Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. The concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time appears to grow exponentially until the rate peaks and then declines, sometimes rapidly, until the field is depleted. It has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. It is important to note that peak oil is not about running out of oil, but the peaking and subsequent decline of the production rate of oil.
M. King Hubbert created and first used this theory in 1956 to accurately predict that United States oil production would peak between 1965 and 1970.[1] His logistic model, now called Hubbert peak theory, and its variants have been shown to be descriptive with reasonable accuracy of the peak and decline of production from oil wells, fields, regions, and countries,[2] and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures. Various modified versions of his original logistic model are used, using more complex functions to allow for real world factors. While each version is applied to a specific domain, the central features of the Hubbert curve (that production stops rising, flattens and then declines) remain unchanged, albeit with different profiles.
Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, believe the high dependence of most modern industrial transport, agricultural and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of oil to have negative implications for the global economy. Predictions vary greatly as to what exactly these negative effects would be.
If political and economic changes only occur in reaction to high prices and shortages rather than in reaction to the threat of a peak, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak. According to the Export Land Model, oil exports drop much more quickly than production drops due to domestic consumption increases in exporting countries. Supply shortfalls would cause extreme price inflation, unless demand is mitigated with planned conservation measures and use of alternatives.[3]
Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.[4]
Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred,[5][6][7] we are on the cusp of the peak, or that it will occur shortly[8] and, as proactive mitigation may no longer be an option, predict a global depression, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization, potentially leading to large population declines within a short period. Throughout the first two quarters of 2008, there were signs that a possible US recession was being made worse by a series of record oil prices.
The demand side of Peak oil is concerned with the consumption over time, and the growth of this demand. World crude oil demand grew an average of 1.76% per year from 1994 to 2006, with a high of 3.4% in 2003-2004. World demand for oil is projected to increase 37% over 2006 levels by 2030 (118 million barrels per day (18.8×106 m3/d) from 86 million barrels (13.7×106 m3)), due in large part to increases in demand from the transportation sector.[10][11]
Energy demand is distributed amongst four broad sectors: transportation, residential, commercial, and industrial.[12][13] In terms of oil use, transportation is the largest sector and the one that has seen the largest growth in demand in recent decades. This growth has largely come from new demand for personal-use vehicles powered by internal combustion engines.[14] This sector also has the highest consumption rates, accounting for approximately 68.9% of the oil used in the United States in 2006,[15] and 55% of oil use worldwide as documented in the Hirsch report. Transportation is therefore of particular interest to those seeking to mitigate the effects of Peak oil.
United States oil production peaked in 1970. By 2005 imports were twice the production.Although demand growth is highest in the developing world,[16] the United States is the world's largest consumer of petroleum. Between 1995 and 2005, US consumption grew from 17.7 million barrels a day to 20.7 million barrels a day, a 3 million barrel a day increase. China, by comparison, increased consumption from 3.4 million barrels a day to 7 million barrels a day, an increase of 3.6 million barrels a day, in the same time frame.[17]
As countries develop, industry, rapid urbanization and higher living standards drive up energy use, most often of oil. Thriving economies such as China and India are quickly becoming large oil consumers.[18] China has seen oil consumption grow by 8% yearly since 2002, doubling from 1996-2006,[16] In 2008, auto sales in China were expected to grow by as much as 15-20 percent, resulting in part from economic growth rates of over 10 percent for 5 years in a row.[19] Although swift continued growth in China is often predicted, others predict that China's export dominated economy will not continue such growth trends due to wage and price inflation and reduced demand from the US.[20] India's oil imports are expected to more than triple from 2005 levels by 2020, rising to 5 million barrels per day (790×103 m3/d).[21]
Population
World populationAnother significant factor on petroleum demand has been human population growth. Oil production per capita peaked in the 1970s.[22] The world’s population in 2030 is expected to be double that of 1980.[23] Author Matt Savinar predicts that oil production in 2030 will have declined back to 1980 levels as worldwide demand for oil significantly out-paces production.[24][25] Physicist Albert Bartlett claims that the rate of oil production per capita is falling, and that the decline has gone undiscussed because a politically incorrect form of population control may be implied by mitigation.[26] Oil production per capita has declined from 5.26 barrels per year (0.836 m³/a) in 1980 to 4.44 barrels per year (0.706 m³/a) in 1993,[27][23] but then increased to 4.79 barrels per year (0.762 m³/a) in 2005.[27][23] In 2006, the world oil production took a downturn from 84.631 to 84.597 million barrels per day (13.4553×106 to 13.4498×106 m3/d) although population has continued to increase. This has caused the oil production per capita to drop again to 4.73 barrels per year (0.752 m³/a).[27][23]
One factor that has so far helped ameliorate the effect of population growth on demand is the decline of population growth rate since the 1970s, although this is offset to a degree by increasing average longevity in developed nations. In 1970, the population grew at 2.1%. By 2007, the growth rate had declined to 1.167%.[28] However, oil production is still outpacing population growth to meet demand. World population grew by 6.2% from 6.07 billion in 2000 to 6.45 billion in 2005,[23] whereas according to BP, global oil production during that same period increased from 74.9 to 81.1 million barrels (11.91×106 to 12.89×106 m3), or by 8.2%.[29] or according to EIA, from 77.762 to 84.631 million barrels (12.3632×106 to 13.4553×106 m3), or by 8.8%.[27]
Agriculture and population limits
Further information: Agricultural effects of peak oil, Food vs fuel and 2007–2008 world food price crisis
Because supplies of oil and gas are essential to modern agriculture techniques, a fall in global oil supplies could cause spiking food prices and unprecedented famine in the coming decades.[30][note 1] Geologist Dale Allen Pfeiffer contends that current population levels are unsustainable, and that to achieve a sustainable economy and avert disaster the United States population would have to be reduced by at least one-third, and world population by two-thirds.[31] The largest consumer of fossil fuels in modern agriculture is fertilizer production via the Haber process, which is essential to high perennial corn yields. If a sustainable non-petroleum source of electricity is developed, this process can be accomplished without fossil fuels using methods such as electrolysis
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