Picture a big Easter egg hunt, with a bunch of kids scouring a park where 1,000 Easter Eggs have been hidden. As the kids fan out and begin to pick up eggs, let’s plot a graph that shows their production in terms of “Eggs per Minute.”
With each passing minute, the number of eggs found in that minute will increase, so our graph will resemble the first half of a classic bell curve, with the production line going upwards and right.
However, a funny thing happens when half the eggs have been found. The rate of finding eggs (production) will flatten out, because the kids have found all the eggs that were in plain sight, and from here on they’ll be rooting around under the bushes and burrowing into the more difficult hiding places.
Even later, as the number of eggs remaining gets really small, the production rate really drops, and our production line comes down sharply, completing the bell curve just as the last egg is found.
The same thing is happening with oil production today. Roughly half of all the oil that will ever come out of the ground has already been pumped up, and so the bell curve that tracks “oil production per day” is reaching a flat peak at around 88 million barrels of oil per day. It’s not a “peak” as much as it a “mesa top,” but petroleum geologists call it a peak, namely “Hubbert’s Peak.”
M. King Hubbert was a petroleum geologist with Shell back in the 1950’s, when he first posited that oil production in any field (or group of fields, or continent, or planet) would follow a bell curve (like the Easter Egg hunt). When Hubbert predicted that gross oil production in the lower 48 states would peak in 1970, everyone laughed at him.
They stopped laughing in 1970 when production in the lower 48 states peaked, pretty much when Hubbert had said it would. That peak production rate was around 14 million barrels per day, and today, we’re down to about 5.5 million per day (from the Continental 48 states). Hubbert later passed away, but his successors used and improved his equations to accurately predict the peaking of the Alaska Prudhoe Bay, in the Gulf of Mexico, and even the North Sea. ALL of those fields have peaked.
Half of all the world’s oil endowment is still in the ground, but the “easy” half has been pumped up already. Much of what remains is in hard-to-reach places or in the hands of people who don’t like us very much. Consequently, we’re not likely to see the production rate per day climb much higher, even with continued drilling.
Back to the Easter egg hunt, wouldn’t you agree that during the last part of the hunt, it doesn’t really help to add more kids to the hunt. Unless you add more EGGS, the production rate is inevitably going down, once you cross the peak.
And that’s where our world appears to be in this day of $4.00 gasoline, at “Hubbert’s Peak.” No one will know precisely when the peak actually occurred for several years following. Nor does it really matter.
What matters is that as demand for oil keeps creeping up year after year, and the supply of oil struggles to stay “at peak,” the cost of oil only has one direction to move.
Don’t look for an overnight crisis, although we’ll see more price spikes every single year, perhaps during hurricane season (or a terror season) but more so because of increasing demand from China, India, and everywhere else. This problem is better viewed as a “long emergency,” to borrow a phrase from the title of one of many books on Hubbert’s Peak. We do need to look for alternatives, and we need to look with vigor. To put a man on the moon, NASA spent $25 billion. That’s way more than we spend now, for research on new energy sources.
Non-conventional oil sources are still a long way off. Hydrogen is the long-term answer for our children’s children, who are likely someday to ask us what we were thinking when we burned up all the oil.
I suppose we could say, we were still on the front side of Hubbert’s Peak, and didn’t see the long emergency coming, until we were over the top, and by then it was pretty late.
