Understanding Peak Oil

Peak oil is not about running out of oil. It is not about how much oil is left in the world. It is not about how much of what oil there is can be extracted. And it certainly is not about whether oil is biotic (produced from organic matter) and, therefore, finite, or abiotic (not produced from organic matter) and, therefore, infinite and replenishable.

Most people do not understand the nature and manner in which oil is stored underground. They mistakenly think it exists in a large pool, like an underground lake or like certain, but very few, water aquifers. It does not.

I am not a geologist but I have, through extensive reading and research, come to understand reasonably what the physical characteristics of an oil reserve are. In most cases oil exists in and is dispersed through porous layers of underground rock, ideally sandstone, and is held in place in that source rock by a heavier, denser cap of rock above it, up through which the oil in the reserve cannot flow. In some cases, most notably in tar sands, oil is held in a subsurface layer of sand but must be secured there by some form of heavy overburden of rock or clay.

But oil in a reservoir generally, but not always, is under pressure. This is generally because of the natural gas volatiles that occur hand in hand with the oil. Oil is extracted or recoverable by releasing that pressure and allowing the oil to be pushed by that pressure to the surface through a well. But that oil will only continue to flow upward as long as the pressure in the reservoir continues. The more oil that is extracted from the reservoir the more the pressure drops, the lower the flow rate becomes until, eventually, the pressure is completely dissipated and the flow stops.

Advanced drilling and extraction techniques used in the oil industry today are attempts to compensate for this natural drop in reserve pressure. Natural gas, carbon dioxide, water and seawater injection are all used in various reserves in order to maintain the pressure needed to drive the oil to the surface. The catch-22 in the use of such techniques, unfortunately, is that the more such techniques are used the more the geological integrity of the reserve is damaged and, ultimately, the less oil that is eventually recoverable. This is being proven out in oil field after oil field, such as in the North Sea, where flow rates, once the peak extraction has been reached, falls off 2-5 times or more quickly than using conventional techniques. So, although you can get the oil out of the ground faster using these techniques the amount of oil the field will ultimately yield is reduced, sometimes by as much as half or even more.

With the possible exception of tar sands, and even there it is questionable, no oil field will ever yield up all of the oil it contains. Eventually the field pressure drops to a point where whatever amount remains simply is not recoverable. Long before that, however, continued recovery and extraction surpasses the point where it is economically viable or reaches the point where the energy invested in recovery exceeds the energy recovered. To put that on an apples-to-apples basis, at that point more oil (energy) is used to get the oil out than the amount of oil you get out.

This is what peak oil is about. Peak oil is the point at which the collective flow rate from all the world's oil fields reaches and surpasses its maximum level and begins an increasingly progressive decline in production. From that point on, unless society's dependence on oil somehow diminishes, demand for oil will increasingly exceed the amount of oil available to fill that demand. Logically this period will be characterised, at least in a capitalist system, by continually rising oil prices. Reduction in demand will, of course, fall to the level of availability with the price rises claiming the casualties.

Governments, politicians, oil industry executives, and even the media have put extraordinary efforts over the past several decades to hide the true state of global oil reserves. They deride and attempt to marginalize the peak oil pundits. They over-trumpet the latest oil discoveries as proof that the peak oil theory is all wrong. They progressively lump new non-conventional and alternative sources of oil into global oil statistics as though they have always been part of the crude oil supply. They attempt to disguise declining flow rates as "voluntary production cut-backs". And quite consistently those leaving this sphere of influence - departing oil industry executives, retiring politicians, retiring oil geologists, departing oil statisticians, etc. - begin telling a very different story than what they were pressured and coerced into telling while they were on the inside.

Most recently, in an article in the UK Guardian, "Key oil figures were distorted by US pressure, says whistleblower" an insider in the IEA (International Energy Agency) reveals how the IEA has consistently massaged their oil data because it was "imperative not to anger the Americans". They have been guilty of fudging the numbers in order "to avoid severe economic dislocation," and panic in the marketplace.

But here's the rub. The IEA isn't just some marginal oil statistics company. It was specifically established in 1974 to be a trusted, reliable source of oil and energy data to the 28 largest, wealthiest and most powerful industrialized nations in the world. The global economy, global foreign policy, global planning is all predicated on the data produced for these nations by the IEA. And it has all been lies. Tell them what they want to hear, to hell with truth.

So how did the peak oil pundits become the bad guys? They have been desperately trying to open the eyes and ears of politicians and governments and the media to realities, realities that will have one of the greatest impacts in human history on our generation. And yet the IEA will issue a couple of Mea Culpas and say a few hail Marys and all will be forgiven and tomorrow the world will be right back to accepting their bogus statistics. And the peak oil pundits will still be criticized, demonized, marginalized and ignored.