The Curve

To start with, there is the curve. In 1956, M. King Hubbert published his famous article, Nuclear Power and the Fossil Fuels, in which he sketched out the basic thesis of oil depletion, including the famous "Hubbert's Peak." As ideally represented above, both oil discovery and extraction follow a predictable pattern of rising production to a peak, or plateau, beyond which no further increases in oil production are theoretically possible. After the peak is reached, production will gradually fall, at a rate similar to the climb. Such a model produces the smooth gaussian curve shown above. Hubbert had found this scenario to be true both for single oil fields, and also for total oil production in a given region or country. Hubbert's startling prediction that the oil production for the lower 48 states would peak around 1970 was proven correct, but not before his theories were subjected to intense ridicule. Much of this ridicule was based on an incredibly incomplete understanding of Hubbert's thesis.

The curve provides an easy visual snapshot of oil depletion, but unfortunately it also errs on the side of simplicity. There is far more to oil depletion than can be captured in a simple chart. For starters, all oil is not equal. There are various kinds of oil, the cheapest of which is known as sweet light crude. Sweet light crude is generally what comes out of the ground first. Think of scenes from a movie about oil, when the drill hits paydirt, and the oil comes gushing out of the ground like a geyser, this gushing oil is the sweet light. This is also (obviously) the oil that is the cheapest to extract, both in finanical cost and in energy cost (Energy Returned on Energy Invested - EROEI). Typically, the pressure is so great in a new field that the oil will initially flow easily out of the ground. In relation to the chart above, the sweet light is what is recovered on the left side of the curve.

It must be noted that the actual chart of oil discovery/depletion will not be a perfect curve like the one shown above. The rate of oil discovery changes from year to year, occasionally increasing despite the long-term decline in new field discovery. It takes a number of years for an oil field to go from discovery into full production, and a particularly large find may cause a temporary spike in supply. Also, on the downward side of the slope, the increasing use of secondary and even tertiary oil recovery methods (including water and gas injection) in relatively new fields causes a steeper depletion rate once the field peaks than would be the case with a "normal" field (the depletion of the North Sea fields is an example of this phenomenon). Thus, an actual "real life" curve would probably look more like this:

After the peak is reached, and production starts down the right side of the curve, the types of oil recovered change dramatically. In general, what is extracted will be oil of the heavier type, often laced with large amounts of sulfer and other unwanted (not to mention toxic) substances, all of which much be filtered out in the refining process. Also, this heavier oil is much more difficult to extract, and will often involve advanced and more energy intensive methods of oil recovery. The ramifications are not hard to grasp: oil will be much more expensive after the peak is reached, and the energy yield (EROEI) will gradually worsen, until there comes a time when it is simply not worth the effort to pull the remaining oil out of the ground.

One of the main myths maintained by the detractors of Peak Oil is that the theory claims the world is "running out of oil." In fact, based on the above analysis of the depletion curve, the world will never run out of oil. What Peak Oil really means is that we shall soon (if we haven't already) run out of cheap oil, and also that there is currently no "Plan B," meaning that civilization has not scalable replacement energy in production.