It has taken between 50-300 million years to form, and yet we have managed to burn roughly half of all global oil reserves in merely 125 years or so. 

The world now consumes 85 million barrels of oil per day, or 40,000 gallons per second, and demand is growing exponentially.

Oil production in 33 out of 48 out countries has now peaked, including Kuwait, Russia and Mexico. Global oil production is now also approaching an all time peak and can potentially end our Industrial Civilization. The most distinguished and prominent geologists, oil industry experts, energy analysts and organizations all agree that big trouble is brewing. 

The world is not running out of oil itself, but rather its ability to produce high-quality cheap and economically extractable oil on demand. After more than fifty years of research and analysis on the subject by the most widely respected & rational scientists, it is now clear that the rate at which world oil producers can extract oil is reaching the maximum level possible. This is what is meant by Peak Oil. With great effort and expenditure, the current level of oil production can possibly be maintained for a few more years, but beyond that oil production must begin a permanent & irreversible decline. The Stone Age did not end because of the lack of stones, and the Oil Age won't end because of lack of oil. The issue is lack of further growth, followed by gradual, then steep decline. Dr King Hubbert correctly predicted peaking of USA oil production in the 1970's on this basis.

It is now widely acknowledged by the world's leading petroleum geologists that more than 95 percent of all recoverable oil has now been found. We therefore know, within a reasonable degree of certainty, the total amount of oil available to us. Any oil well has roughly the same life cycle where the production rate peaks before it goes into terminal decline. This happens when about half of the oil has been recovered from the well. We have consumed approximately half of the world’s total reserve of about 2.5 trillion barrels of conventional oil in the ground when we started drilling the first well at a current rate of over 30 billion a year, meaning the world is nearing its production plateau.

Worldwide discovery of oil peaked in 1964 and has followed a steady decline since. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. There have been no significant discoveries of new oil since 2002. In 2001 there were 8 large scale discoveries, and in 2002 there were 3 such discoveries. In 2003 there were no large scale discoveries of oil. Given geologists' sophisticated understanding of the characteristics that would indicate a major oil find, is is highly unlikely that any area large enough to be significant has eluded attention and no amount or kind of technology will alter that. Since 1981 we have consumed oil faster than we have found it, and the gap continues to widen. Developing an area such as the Artic National Wildlife Refuge in Alaska has a ten year lead time and would ultimately produce well under 1% of what the world currently consumes (IEA). 

Oil is now being consumed four times faster than it is being discovered, and the situation is becoming critical.

"The consumption of a finite resource is simply a finite venture and the faster we use the quicker it peaks"  (M. Simmons)

"Peak oil is now." German Energy Watch Group –2008

"By 2012, surplus oil production capacity could entirely disappear..…" U.S. Department of Defense –2008 & 2010.

"A global peak is inevitable. The timing is uncertain, but the window is rapidly narrowing." UK Energy Research Centre -2009

The Saudi Arabia Case

With more than fifty oil-producing countries now in decline, focus on the oil-rich Middle East has sharpened dramatically. Countries of the Middle East have traditionally been able to relieve tight oil markets by increasing production, but, as the this region nears its own oil peak, any relief it can provide is limited and temporary.

Saudi Arabia is a major oil producer with 73% of all incremental world demand being met by this country. The worrying fact is that 90% of their production comes from only 5 mega fields (one is the Ghawar field which is the biggest ever discovered), and are all at risk of unplanned production collapse. In 2004 there were warning signs of production falling into depletion. For years, Aramco, the Saudi national company, use secondary recovery techniques by injecting enormous amounts of seawater (7 million  barrels daily) into their biggest field to boost production. These methods have only temporary effects, and lead to accelerated rates of depletion in the future. 

Matt Simmons, long time energy analyst who studied energy for 34 years, in his book “Twilight in the Desert” effectively confronts the complacent belief that there are ample oil reserves in Saudi Arabia and has created a compelling case that Saudi Arabia production will soon reach a peak, after which its production will decline and the world will be confronted with a catastrophic oil shortage. The factual basis of the book is over 200 technical papers published over the last 20 years which individually detail problems with particular wells or particular fields, but which collectively demonstrate that the entire Saudi oil system is “old and fraying” with reserves deliberately vastly overestimated.  

Geologist Dr Colin Campbell in a 1998 article in Scientific American also details numerous discrepancies about estimates in Middle East reserves. The extent of reserves reported remained amazingly constant from year to year and then jumped dramatically. A similar unexplainable jump occurred in other countries in the Middle East, sometimes even in the total absence of exploration, strongly suggesting that OPEC's reserves are overstated.

Peak Oil Imminent

The only uncertainty about peak oil is the time scale, which is difficult to predict accurately. Over the years, accurate prediction of oil production was confronted by fluctuating ecological, economical, and political factors, which imposed many restrictions on its exploration, transportation, and supply and demand. At the end of 2009, the Kuwait university and the Kuwait Oil company collaborated in a study to predict the peak date using multicylic models, depending on the historical 2 oil production trend and known oil reserves of 47 major oil production countries, to overcome the limitations and restrictions associated with other previous models. Based on this model, world production is estimated to peak in 2014. Other experts, oil companies and analyst firm estimate the peak date between now and around 2020. What's certain is that the global production will go into a permanent decline within our generation.

"One of nature's biggest forces is exponential growth" 

(Albert Einstein)

At a current average global consumption growth rate of 2% annually (1995-2005), by 2025 the world will need 50% more oil (120 mbd), and the International Energy Agency (IEA) admits that Saudi will have to double oil production to achieve this, which is not feasible in even the most optimistic scenario. And that's not even taking into account that 80% of the world is only just starting to use oil & gas. In recent years, energy demands from mostly emerging economies have increased dramatically in populous countries as their oil consumption per capita grows. The International Energy Agency estimates that 93% of all incremental demand comes from non-OECD countries. Therefore, in time oil prices will continue to rise.

Based on Simmon’s analysis, sudden and sharp oil production declines could happen at any time. Even under the most optimistic scenario, Saudi Arabia may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand. There is no likely scenario that some new frontier can replace Middle East oil declines.

From Wiki leaks it has emerged that Senior Saudi energy officials have privately warned US and European counterparts that Opec would have an “extremely difficult time” meeting demand and that the reserves of Saudi have been overstated by as much as 40%.

Exxon Mobil Corporation, one of the world's largest publicly owned petroleum companies, is the most forthright of the major oil companies having had the courage and honesty to quietly publish the declining discovery trend, based on sound industry data with reserve revisions properly backdated. Furthermore, the company is running page-size advertisements in European papers stressing the immense challenges to be faced in meeting future energy demand, hinting that the challenges might not be met despite its considerable expertise. Chevron recently joined their campaign publishing an advertisement in national newspapers stating that the 'Era of Easy Oil is Over' (see here to view full ad). 

"Initially it will be denied. There will be much lying and obfuscation. Then prices will rise and demand will fall. The rich will outbid the poor for available supplies." 

The fallacy of Alternatives

The public, business leaders and politicians are all under the false assumption that oil depletion is a straightforward engineering problem of exactly the kind that technology and human ingenuity have so successfully solved before. Technology itself has become a kind of supernatural force, although in reality it is just the hardware and programming for running that fuel, and governed by the basic laws of physics and thermodynamics. Much of our existing technology simply won't work without an abundant underlying fossil fuel base. In addition, physicist Jonathan Huebner has concluded in The History of Science and Technology that the rate of innovation in the US peaked in 1873, and the current rate of innovation is about the same as it was in 1600. According to Huebner, by 2024 it will have slumped to the same level as it was in the Dark Ages. Hence, without sufficient innovation and a comfortable surplus of fossil fuels, we may simply lack the tools to move forward. 

With this energy base dwindling, there is simply not enough time to replace a fluid so cheap, abundant and versatile. It is rich in energy, easy to use, store, and transport. Nothing has the bang for the buck of oil, and nothing can replace it in time - either separately or in combination. Wind, waves and other renewables are all pretty marginal and also take a lot of energy to construct and require a petroleum platform to work off. 

Natural gas is a diminishing resource as well and cannot satisfy the growing demand for energy. US Gas supplies were so low in 2003 after a harsh winter that to preserve life and property supplies were close to being cut off to manufacturers, electric plants and lastly homes.  

Ethanol has a net energy value of zero (not accounting for soil and water damage and other costs due to unsustainable agricultural practices) - it is subsidized as a boon to agribusiness and would have a negligible effect (Prindle, ACEEE).  

Solar energy produces marginal net energy, but are still decades away at best from being a viable substitute given the recent rate of progress in efficiency and costs (averaging about five percent a year) and is nowhere ready to meet the world's energy needs. More importantly, solar photovoltaic cells (PVC) are built from hydrocarbon feed stocks and therefore require excess resources. It is estimated that a global solar energy system would take a century to build and would consume a major portion of world iron production (Foreign Affairs, Rhodes). 

The widespread belief that hydrogen is going to save the day is a good example of how delusional people have become. Hydrogen fuel cells are not an energy source at all, but are more properly termed a form of energy storage. Free hydrogen does not exist on this planet. It requires more energy to break a hydrogen bond than will ever be garnered from that free hydrogen. The current source of hydrogen is natural gas - that is, a hydrocarbon. In the envisioned system of solar PVC & hydrogen fuel cells, every major component of the system, from the PVC to the fuel cells themselves will require hydrocarbon energy and feedstocks. The oil age will never be replaced by a hydrogen fuel-cell economy. 

Coal is abundant, but its net energy profile is poor compared to oil and its conversion process to synthetic fuels is very inefficient. Coal would have to be mined at much higher rates to replace declining oil field. In addition, coal production is extremely harmful to the environment. One large coal burning electric plant releases enough radioactive material in a year to build two atomic bombs, apart from emitting more greenhouse gases than any other fuels.  Coal is implicated in mercury pollution that causes 60.000 cases of brain damage in newborn children every year in the USA. Resorting to coal would be a very big step backwards and what we may face then may be more like the Dim Ages. More importantly,  coal is distributed very unevenly with the top three countries (China, USA, USSR) possessing almost 70% of total. Much of the current oil  and gas supply is in low-population countries, such as Saudi Arabia, that cannot possibly use all of the production for themselves.  They are hence quite willing, indeed eager, to sell it to other countries.  When oil and gas are gone, and only coal remains, and the few (large-population) countries that possess it need all of it for their own populations, it will be interesting to see how much is offered for sale to other countries.

Obtaining usable oil from tar sands requires huge amounts of energy, as it has to be mined and washed with super hot water. From an energy balance, it takes the equivalence of two barrels of oil to produce three, which is still positive but poor in terms of energy economics. In the early days of conventional oil, this ratio used to be one to thirty. 

Nuclear power plants are simply too expensive and take ten years to build, relying on a fossil fuel platform for all stages of construction, maintenance, and extracting & processing nuclear fuels. Additionally, uranium is also a rare and finite source with its own production peak. Since 2006, the uranium price has already more than doubled.

Nuclear fusion is the kind of energy that the world needs. However, mastering it has been 25 years away for the past 50 years, and still is... 

Fossil fuels allowed us to operate highly complex systems at gigantic scales. Renewables are simply incompatible in this context and the new fuels and technologies required would simply take a lot more time to develop than available and require access to abundant supplies of cheap fossil fuels, putting the industrial adventure out of business.

In an interview with The Times, former Shell CEO Jeroen van der Veer calls for a “reality check” and warns that the world’s energy crisis cannot be solved by renewables. “Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems. Just when energy demand is surging, many of the world’s conventional oilfields are going into decline. The world is blinding itself to the reality of its energy problems, ignoring the scale of growth in demand from developing countries and placing too much faith in renewable sources of power”.

Alternative energies will never replace fossil fuels at the scale, rate and manner at which the world currently consumes them, and humankind's ingenuity will simply not overcome the upper limits of geology & physics.  

Current Global Energy Production: No substitutes can replace fossil fuels at the same scale & rate at which the world currently use them