Peak Oil is Real

Arab members of OPEC cut oil supplies to countries that backed Israel in 1973. Overnight the west lost major supplies of oil, and the prices soared. The high prices caused a drop in demand, as people just could not afford so much oil. Both the political and economic factors slowed oil production and consumption. But this was not to do with oil "running out". This was an artificial shortage that was entirely political.

The seventies crisis has been used by some as proof that geologists are wrong about world oil production declining. They think geologists warned in the seventies that oil was running out. They have probably confused the prediction of M. King Hubbert that the oil production of the continental 48 states would begin declining in the early seventies with the artificial and political oil shortages of the early seventies. Hubbert's prediction was correct, but he had not predicted world oil production decline, only the lower 48 states. Eventually the Middle East situation stabilized and went back to normal levels of production.  So some critics have used that return of production as indicative that the geologists were wrong, when in fact they were correct. Is Peak Oil a real phenomenon or just some scary scenario painted by end of the world crazies?

From Deutsche Bank Research Report, December 2, 2004:
"The Association for the Study of Peak Oil & Gas (ASPO), a group of former petroleum geologists in the service of prominent petroleum corporations (e.g. BP Amoco) argues in favor of taking a different angle. It assumes a steep ascent in the output curve up to a peak, followed by a comparatively flat descent. The result is that the peak in production comes well ahead of the depletion mid-point, meaning that the production curve peaks far earlier than hitherto anticipated. Initially this applies to oil, and then, with time lag, to natural gas. In its mid 2004 updated forecast for oil, the ASPO brought the peak for oil forward from 2010 to 2008."

The report continues: "The end-of-the-fossil-hydrocarbons scenario is not therefore a doom-and gloom picture painted by pessimistic end-of-the world prophets, but a view of scarcity in the coming years and decades that must be taken seriously. Forward-looking politicians, company chiefs and economists should prepare for this in good time, to effect the necessary transition as smoothly as possible."

There you have it. An industry led research group and a respected major financial institution recognize "Peak Oil" and acknowledge that action is needed.