The Elephant in the Room.
Peak oil in a nutshell means the glass is half full or half empty depending on your proclivities.
There is a school of thought, which theorizes world wide oil production has peaked. Meaning the world is pumping as much oil today as ever will be possible to pump against the backdrop of increasing demand. This does not mean we are out of oil. What it means is the days of “Cheap Oil” are over forever.
The data reveals that discovery peaked in the 1960's. No major finds on the level of a Saudi Arabia (disc. 1932) have been found for 40 years. The last really impressive finds were in Alaska and the North Sea. Both of which have already peaked. The North Sea peaked fully ten years before it was expected to. This can be attributed to high demand and superior technologies that allow for more rapid exploitation of a field.
It should be noted that the world has been thoroughly explored and current technology makes it difficult to intentionally drill a dry hole.
The term peak oil can be attributed to a man called Marion King Hubbert. He predicted in 1949 that the USA would peak in oil production in the year 1970 and he was right. US production in 1970 was at it's highest, 10 million barrels a day (mbd). By 1980 despite pumping and drilling as hard and as fast as we could production fell to 6 mbd and has been on a irreversible decline ever since. Prior to that the USA was the major exporter. Today the USA is the largest importer of oil.
Hubbert made his prediction based on two bell curves. The first curve represents discovery of oil. The second represents production. It takes a few years to bring an oil well on line. So by off-setting the curve for production over the discovery curve, Hubbert was able to successfully determine when all of the wells would reach capacity. After which they fall into irreversible decline. His prediction for world wide peak was the year 2000. Some believe he was right. Others with equal authority believe it happened in 2005. Still other qualified individuals believe we have until 2030. No one disagrees that we are rapidly approaching a peak in “crude oil” production. Crude oil is the good, cheap stuff.
No one knows for sure what the reserves are in Saudi Arabia. The Saudi's keep those numbers a state secret. But they pump and deliver around 12mbd. Bush has danced twice for the Saudi's in the past two months asking them to pump more per day. They have declined. They've stated the stocks are fully supplied. So why is Bush humbling himself asking for more? Does that sound like something Bush is inclined to do? Now he has sent Dick Cheney to do some dancing. Cheney is there now.
The fields in Iraq were predicted to deliver much more oil than they are. Even after adequate time to get them up to capacity. Currently they are delivering 2mbd. The Iraq Oil Law has not been signed by the Iraqi parliament. This document would effectively turn the oil fields over to our majors.
Iran has peaked and they struggle to deliver 4-6mbd. Maybe they really do need the nuclear power plants.
The so-called genocide in Darfur is all about oil. Chevron was there in the early eighties. Civil war drove them out. Here is a little red meat for you conspiracy theorist to chew on. AIDs started in Africa at this very same time. China has moved into Sudan and they currently hold the major concessions. Chevron is next door in Chad. Before being named National Security Advisor by G.W., Condoleeza Rice was a Chevron Director (1991-2001).
In Alberta Canada there is something called Oil Sands. It's estimated they hold 1.5 trillion barrels of oil in them. That's the kind of “crude oil” find that we need to delay peak by an adequate number of years. Provided we use the opportunity to prepare for the inevitable. However, this is not oil in the conventional sense. Oil sands are not cheap easy to pump “crude oil”. You don't drill and pump it. You have to dig for it. It's more like coal. First you cut down all the trees. Then you strip mine the earth. Then you apply massive heat to tons of dirt with natural gas. On top of all that the refining process uses tremendous amounts of fresh water. In essence you are using fossil fuels and natural resources at incredible levels to make a barrel of oil. Expectations are that by 2020 the oil sands in Alberta will be producing 5mbd. Currently the world is using 85 million barrels a day. Ironically the world is pumping just about 85 million barrels a day also.
Venezuela also has oil sands. Because they are on the equator the heating requirements for these oil sands is less than in Canada. However, Hugo Chavez has thrown out the companies with the technology to mine and refine these resources and consequently Venezuela's production capacity is sorely lacking. Remember it takes 2-5 years to get production to capacity.
This is just a little food for thought. I encourage you to type peak oil into your favorite search engine and explore for yourself. Here is just one link from yesterday that I found interesting.
What's Up With Oil?
Lastly it might be useful to remember that only a couple hundred years ago wars were fought over salt. Technology solved that problem. Hopefully, it will come to the rescue again.
Disclaimer – the numbers in this article are close approximations done so to make them easier to manage.