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. 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. 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, 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.
World discovery of oil peaked in 1964 and has been declining ever since, despite considerable improvements in technology, and there is no prospect of any significant new large discoveries. We are currently consuming more than 4 barrels of oil for every one discovered. It is widely believed that we are now approaching World Oil Peak.
This does not mean that the world is running out of oil, it means that we are running out of the cheap, easy to access oil. Globally, it is thought that approximately half of all oil that was laid down in the earth has been extracted. We have currently used about 1Trillion barrels of the 2Trillion barrels that was the legacy from geological vents of over 90million years ago.
According to the Association for the Study of Peak Oil (ASPO) world oil peak is likely to occur sometime between 2008 and 2010. Some analysts believe we may have already passed the peak and are currently on an uneven plateau. It seems certain however that within a few years, the effects of oil peak will begin to be felt as for the first time in history the amount of available energy in the world begins to decline. What Peak Oil really means is that there will be a gap between supply and demand. There will be less to go around just as more and more countries are developing and want more and more.
Oil companies have extracted all the high quality oil and although there is plenty of oil remaining, its low quality means that it will take increasing amounts of money and energy to extract and refine. If it takes one barrel’s worth of oil energy to extract one barrel of oil, then further extraction simply isn’t economically viable. Over the last hundred and fifty years, oil has fuelled incredible economic and population growth, underpinning every industry, and every aspect of our lives, from agriculture to transport to housing. If we do not prepare for Peak Oil, the consequences could be severe.