The Peak Oil Theory

The Peak Oil Theory Robert Mabro A statement of the type ‘All men are mortal; Socrates is a man; therefore Socrates is mortal’ does not constitute a prediction but the deduction of a self-evident truth.To say that an exhaustible resource will be exhausted is not a prediction but, under certain conditions, a tautology. The only qualification is that an exhaustible resource will not be exhausted if, for some reason, production ceases while reserves are still available.

The statement that the production of crude oil, an exhaustible resource, will reach a peak will not be entirely a tautology if it also told us something about the production pattern over time; something that is not necessarily implied in the exhaustibility concept. The peak story tells us, indeed, that after rising over years, decades or centuries, production will enter a phase of decline. The peak could take different shapes however. It could appear as the apex of an acute angle, or stretch out over a long period in the form of a plateau, or emerge more than once in the shape of a saddle or as a chain of dunes.

In short, it is not sufficient to say that an exhaustible resource will be eventually exhausted and that its production will decline until extinction after reaching a peak. These are not predictions. Such statements are of no interest whatsoever unless we are told the dates at which the peak will be reached, and the likely shape of the production curve before and after the peak.

Socrates knows that he is a man and as such a mortal being. What he would like to know is when exactly he will die and in which manner.

The authors and promoters of the peak oil theory clearly understand that a prediction must relate to the date at which the relevant event – the production peak – will occur. They did indeed stick their necks out and told us once that the peak will be reached in the late 1980s, then in 2000, then in 2005. They proved to be wrong on all occasions. World oil production is still rising year after year.

One major reason for their propensity to bring forward the dreaded event seems to be an eschatological inclination. Consciously or sub-consciously they are inclined to predict the end of a world economy that was fuelled by cheap oil over several decades. They also want to catch the headlines. For these reasons they need to predict an early peak. To tell us, for example, that oil production will peak in 2030 and oil resources be fully exhausted by 2080 would have little impact. The prediction has to be about an imminent event.

I do not know when the oil production will be reached. I accept as evident that unless world oil demand collapses in a significant way a peak of some shape will inevitably obtain. We need to examine the methodologies underlying current predictions about the imminent peak in order to assess their plausibility.

The first set of methodological problems relates to the definition of four relevant concepts: crude oil, production, reserves and resources.

One may think that the term ‘crude oil’ is defined with great precision. It is not. The reason is that the substance referred to as ‘crude oil’ occurs under a wide variety of physical, chemical and geological circumstances. Thus the physical nature of that substance varies along a continuum from very viscous (e.g. bitumen) to liquid, to condensates (gases that are liquid such as dew at certain temperatures). But where are the border lines between viscous and liquid, viscous and solid, liquid and gas? These questions are subject of much disagreement and controversies. The issue is important because the world holds huge reserves of tar sands, especially in Canada, and in the Orinoco belt bitumen in Venezuela. These are usually referred to as ‘unconventional oil’. Several peak oil theorists base their analysis on conventional oil (liquid and condensates) only. Yet unc