The King of Pointland

The End of Oil?

A few months ago, Andrew sent me a link to this alarming page, where I learned that "Civilization as we know it is coming to an end soon." This was my introduction to those who hold stronger and weaker versions of the same belief: that we have reached, or soon will reach, the peak of global oil production, and that the eventual result will be runaway oil prices as growing demand meets a failing supply. If we are still as dependent on petroleum then as we are now, we can expect a global recession of epic proportions.

I greeted this with a healthy dose of skepticism. The end of oil has been repeatedly predicted, prematurely, for more than a century. Crude oil prices are still relatively low. A barrel for delivery next month is about $36 right now, and the futures market thinks the price will drop over the next five years.

Still, serious people with serious credentials, like geologist Colin Campbell, are behind this oil peak warning. They base their argument on something called the Hubbert Curve, which predicts that in any large region, the production of oil will peak when half the oil has been extracted. You can read all about it in this March 1998 Scientific American article, The End of Cheap Oil.

Equally serious people, like economist Michael Lynch, are fairly critical.

I mention this topic now only because I've noticed a number of recent articles and columns in the mainstream press raising the issue. Running Out of Oil -- and Time appeared in the Los Angeles Times earlier this month. And in Barron's today: Half Empty? World oil supplies, while not running out now, may plateau sooner than thought. [Registration is required for the last article, so I uploaded a PDF. Unfortunately, the images got cut by page breaks. Here they are. ]