- Peak oil is defined as the highest possible rate of oil production, after which the production rate slows
- Peak oil is related to the amount of that resource left in the ground, but experts say it’s more directly linked to technology and economic factors
- Experts disagree over whether or not we have already reached peak oil
Oil may be the lifeblood of modern civilization, but some experts say that resource could be running thin. After reaching the highest possible levels of oil production, known as peak oil, a combination of geological, technological and economic factors will cause the production rate to slow, these experts say. And once that occurs, life as we currently know it will change.
“The problem of the peaking of world conventional oil production is unlike any yet faced by modern industrial society,” explains “Peaking of World Oil Production: Impacts, Mitigation & Risk Management,” a report published in February 2005 for the U.S. Department of Energy. The report adds that as we near peak oil, prices for the commodity will increase dramatically, with the potential for “unprecedented” economic, social and political costs.
Energy experts at The University of Texas at Austin say peak oil is a valid concern, but they disagree over its timing and the severity of the threat. According to some experts, technological innovations mean peak oil won’t become a reality anytime soon. But other experts say we are already past the peak — and the issue of slowing oil production is a problem we can’t innovate our way out of.
Are We There Yet?
Peak oil is related to the amount of that resource left in the ground, but experts say it’s more directly linked to other factors.
“It has to do with the technology and economics, or the combination of technology and economics; what could people afford to buy in terms of oil and what can we afford to produce,” says Carey King, a research associate in the Jackson School of Geosciences and lecturer in Business, Government and Society at the McCombs School of Business. In other words, as we use up the globe’s most accessible oil supplies, we need to ramp up our spending and innovation to pull more of that resource from the ground, which can send prices ever higher.
So have we reached peak oil? Experts are divided. “We've reached the peak of sort of conventional oil — anything that was discovered between 1850 and 2004 — in about 2004 to 2005,” says Professor Tad Patzek, chair of the Department of Petroleum and Geosystems Engineering. “All those giant [oil] fields that we have discovered are now slowly petering out and no new super giants are on the horizon. Therefore, our rate is going to go down.”
Others disagree. “It depends on what you define as oil,” says Dr. Scott Tinker, director of the Bureau of Economic Geology. “I include conventional, unconventional and other sources of petroleum. And eventually, a non-renewable resource will peak and start to roll over,” Tinker says. But he remains optimistic. “We are a ways away from combined oil peaking, I think,” Tinker says.
The Problem With Peak Oil
Oil currently powers key aspects of modern life, enabling everyday activities like our commute to work and the transport of food to our local grocery store. Therefore, as its production slows and prices rise, expect an impact. The scope of that impact isn’t entirely clear, however.
“It’s hard to say what kind of scramble will occur. If the [oil production rate] decline occurs slowly enough, then maybe it’ll be something that people slowly adjust to, and nothing crazy happens,” King says.
In fact, he explains, adjustments are already occurring. Since the end of 2011 the U.S. has become a net exporter of refined oil products, such as diesel and gasoline, which indicates Americans already can’t afford what they’re producing. After further decline, he adds, it may become tougher for people to purchase goods from abroad or even to travel.
“If it [oil production rate] declines quickly, that’s when things maybe get scary,” says King, who spoke about energy technology and policy at the UT Energy Forum in February 2012. “It’s not clear to me there’ll be tremendous suffering, but there will be required adjustments to lifestyles and city designs that Americans have yet to accept.”
Drivers may be among the first who have to adjust. According to The University of Texas at Austin Energy Poll from September 2011, 69 percent of respondents already describe gasoline prices as “very high,” even as 89 percent continue to put gasoline in their vehicles (rather than driving electric cars, for example). New poll results will publish April 11.
Peak oil will be especially rough on the poor. Higher oil prices mean some low income workers will face a tough decision: Either stop making the drive to work or find other ways to makes ends meet. “They will be skimping on food, on education, on many other things and become angrier and more displeased in general. That's not a good social phenomenon,” Patzek says.
Even as politicians shy away from discussion of peak oil, Patzek says declining oil production could lead to one possible, dangerous extreme. “You have a destabilized, angry society which doesn't listen anymore to anyone. You have cities going bankrupt left and right. You may have states going bankrupt,” he says.
That’s the frightening scenario. But before we ever get to that point, Tinker says the high price of gasoline will force people to develop new vehicle technologies. “Oil will not run out. Instead, the tension on price caused by demand and supply will allow for alternatives to take oil’s place. This is already happening, slowly,” he says.
Solutions to The Slowdown
So do we need to worry? Tinker, for one, doesn’t think so.
“The industry continues, with smart people across the board, to find more oil. It’s in deeper water, it’s in new frontiers like the Arctic, it’s in rocks that we didn’t think we could produce from, like shales, and that’s technology allowing that,” Tinker says. “Combine new sources of oil with growing supplements from natural gas [compressed natural petroleum, liquified natural gas], biofuels, electricity, and efficiency, I don’t think the doomsday scenarios play out. But it makes for great Hollywood movies and political speeches!” he says via email.
The energy industry doesn’t appear too concerned, either. “As the 'cheap oil' has peaked, society will clearly shift towards economic alternatives to oil,” says Brian Uhlmer, managing director and head of energy research at investment bank Global Hunter Securities and a 2009 graduate of the Houston Texas MBA program. “We believe it will be driven primarily by using natural gas, which is abundant, for transportation fuels, thus decreasing demand for oil. We have already seen this begin in many areas, but expect it to be widespread,” Uhlmer says.
However, Patzek remains adamant that while technology can slow the process, the declining rate of oil production can’t be prevented.
“People like me have to go now to ever deeper, ever more dangerous places with ever higher risks to keep on supplying people who then drive their stupid Hummer and waste [fuel] left and right,” Patzek says. “That cannot continue. It just cannot.”
Since politicians appear unwilling to address peak oil, Patzek says consumers must take action to insulate themselves against higher energy costs, relying on home-grown options like gardening and car pooling. At the same time, businesses will need to be more efficient and get used to achieving less with less. That’s because Patzek knows where the answer to peak oil won’t be found.
“Technology cannot save us from ourselves,” he says.