Hubbert’s Peak is the highest point on an oil well’s bell curve. Because the downside comes next, it represents the beginning of the end of our oil supply.
And just the beginning of our story…
Peak Oil Supply
M. King Hubbert was a geologist who said in 1956 that our oil supply would peak within 15 years of 1956. It would touch the top of its bell curve and then slide from there as the world’s oil wells became exhausted.
We had a more recent false alarm during July, 2008 when the price of Brent hit its all time high of $145.40 a barrel. Thinking price was soaring because supply was sinking, analysts predicted $200 a barrel and a (bell curve) production descent from peak oil.
But then fracking came along. Supply skyrocketed, price plummeted and we had a new outlook. It was still called peak oil but defined very differently.
Peak Oil Demand
Now, peak refers to the demand for oil rather than its supply.
This graph provides a clue about the probable future of oil demand:
Road demand for oil could dissipate as hybrid and electric vehicles become increasingly popular. Add to that the proliferation of alternative energy sources and you could soon have a peak in the demand for oil. Referring to demand, some experts say we could reach peak oil by 2050.
Similar to the supply side predictions, from there, it is a straight slide downward.
Our Bottom Line: Scarcity
The basic economic problem is scarcity. Defined as finite quantities by economists, scarcity certainly describes our oil supply.
But does it describe the catastrophe envisioned by Dr. Hubbert? With peak oil moving from the supply side to our demand, perhaps not. Flip-flopping from supply to demand, it is even good news for our environment.
My sources and more: My curiosity was piqued with a new Quartz article. Having last discussed peak oil in a 2011 post, it was time to return. Updating the topic took me to Bloomberg and away from supply to demand. However, if you read just one piece, do look at this excellent blog post from a Duke professor emeritus.
Please note that I first saw the “flip-flop” applied to peak oil in a blog post from Duke University’s Nicholas Professor Emeritus of the Environment, Bill Chameides.
