What is Peak Oil?

Global oil production and demand rose throughout the 20th century, tempered only by the energy crises of 1970s and 1980s. Despite challenging geopolitics, oil remains a dependable asset that drives the entire global economy. So it is a threatening proposition when experts suggest that this century-old pattern of expansion might falter.

 

All oil fields follow a similar development profile, with production rising to a peak then slowly declining. Advanced extraction techniques can slow the decline but never stop or reverse it.

 

Global production, being the sum of individual fields, must inevitably follow this pattern. We have already extracted one trillion barrels of oil, half the consensus estimate of all the conventional oil that exists. Recovering the second trillion barrels, then, will occur in a slow decline — a mirror image of last century's production build-up.

 

Of the 98 oil producing countries in the world, 64 are thought to have passed their production peak. Peak production in the continental United States came in 1971.

 

Should we worry about running out by 2015, or 2025? With one trillion barrels to go, running out for real is a long way off. The key point to grasp is that within the next 10 years, the growing disconnect between supply and demand will dramatically change virtually every aspect of our daily lives.

 

Production trends: The chart above plots the rise of global oil production and sources of oil from mid-20th to mid-21st centuries. The decline starts around 2010. view larger

 

 

 

The original card set

You can view the original Drivers of Change card series, which was released in 2006.

Why is it important?

Following the oil crises of the 20th century, other energy sources were pressed into service where practical, such as coal for power generation. Transportation was an exception and remains so. Simply put, when it comes to transportation, there is currently no scalable energy substitute for oil.

 

Transportation is essential to the global economy; increasing demand for air travel, and the rising material aspirations of people in developing countries, will only deepen this dependence. Rising prices and new technologies might address the problem, but recent trends suggest otherwise, as price increases have neither reduced demand nor spurred greater production.

 

Current production is dominated by a handful of the large existing fields; new discoveries are small. Fourteen so-called “super-giant” fields, each producing more than 500,000 barrels a day, provide 20 percent of current global output. Another 27 percent comes from 102 fields that produce more than 100,000 barrels per day. The remaining 53 percent comes from over 4,000 small fields.

 

What about unconventional sources like tar sands in Canada and Venezuela, and oil shales in the US? Though their production is increasing, production methods are difficult. They consume vast quantities of natural gas and water, face shortages of skilled labor and, in Canada, low production in winter. Actual production is minuscule compared to global oil consumption.

 

Declining discoveries: Annual discoveries of new fields have declined since the 1970s as production has continued to climb. (One gigabarrel=1 billion barrels) view larger

 

 

 

FII / Sustainability

Learn more about Arup's Foresight Innovation

and Incubation group

and our sustainability

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Image: Dongtan eco-city

What is the outlook?

The post-peak decline is expected to mirror the pre-peak ramp-up. Common assumptions predict a 2-3% annual downward trend in global production. With foresight and planning, this will be manageable.

 

One place to start is controlling demand. Instead of accusing oil producing nations of limiting supply to drive up prices, we need to initiate stronger demand management measures and begin to think of petroleum as a valuable resource, not a commodity. At the same time, we need to bring the debate over peak oil into the open.

 

Our infatuation with individual transport in the form of the automobile, our driving habits (unnecessary journeys of single occupancy) and inefficient vehicles all must be reexamined. We need to acknowledge an imperative to travel less and support investment in public transport. Bear in mind that personal mobility is a very recent phenomena first enjoyed by our grandparents, and then only when they reached middle age.

 

The price of oil will continue to rise, even with an expected reduction of demand as poorer countries find themselves unable to afford the drain on their economies. Petroleum has become part of everything in modern societies. It is found in the food we eat, the clothes we wear, and the goods we import from other countries.

 

For the most passionate advocates of sustainability, a high oil price helps make the financial case for reducing waste and investing more in energy efficiency. Still, society must consider a safety net for poorer populations around the world who are most exposed, and least able to adjust, to a world where gas costs $50 a gallon, or more.

 

Production and price: As this graph of North Sea oil production shows, production is falling while prices rise. Oil is currently trading at more than $100 a barrel. view larger

 

 

Watch the video

This 3 1/2 minute video, titled "Plausible Futures," provides an overview of Drivers of Change topics.

About Drivers of Change

Arup's Drivers of Change initiative is an ongoing research program exploring the issues most likely to have a major impact upon society, Arup’s work and our clients. The six topics to date cover energy, climate change, water, waste, urbanization and demographics. In our research, we investigate the facts and explore the implications of those findings and publish them based on in-depth research using primary and secondary data, delphi surveys, interviews and workshops.

 

The Drivers of Change concept was developed by the Foresight, Innovation and Incubation (FII) team at Arup to indicate key issues that will play a role in our future — aging population, energy use, connected communities, among others. The drivers affect all of us and we, in turn, can affect them. They are the ongoing theme of workshops, publications, talks and exhibitions. They adapt in response to the feedback received and evolve with the changing built environment.

 

According to Dr. Chris Luebkeman, director for Global Foresight and Innovation: "Change has always been with us and is essentially the only constant that we know. Thus, change itself is not really of interest; it is the context of change that is vital to understand. And, in order to understand the continually evolving contexts of change, we must focus on what is actually driving change.

 

"Our work shows that there is no singular global context; there are no ‘definitive’ drivers which rise above all. Once the drivers are openly described, then the implications can be discussed and (hopefully) acted upon."

 

 

 

 

A new Drivers of Change

cardset will be released

this spring.

 

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