Head Tale

Peak Oil is a theory that is increasingly relevant as the price of oil and gasoline continue to skyrocket.  It was first proposed in the 1950's by an American geoscientist named M. King Hubbert who worked for Shell in Texas and correctly predicted that the supplies of oil were limited in the United States and extraction would peak at some point in the late 1960's then fall afterwards. 

This theory was later applied to world supplies of oil with the prediction for when peak oil would occur worldwide ranging anywhere from 2010 to “never” depending on which study you read.  (The “never” people are the ones who claim that oil is produced continually by internal earth processes and are sort of like the folks who still deny climate change in the face of overwhelming evidence to the contrary.)

MetaFilter recently had a thread about an International Agency study of 400 oil fields that found that, barring a substantial decrease in demand, the world would face an oil
supply shortfall of 12.5 million barrels a day by 2015 or 15% of current
production.

On the contrary, even people who agree with the idea of peak oil and don't think it'll bubble from the ground forever, point out that improvements in technology and/or the rising price of oil will lead to more finds or re-approaching fields that were previously unfeasible or thought to be tapped. 

But with massively increasing demand from China, India and other developing nations, the odds are that either technology or the promise of massive profits inherent in $200 (or $300 or more) barrels of oil still won't be enough to meet demand.  (Oil is at $135/barrel today which is an increase of about 35% since the start of 2008, nearly double what it was at this time last year and seven times the $20/barrel price that oil hovered for most of the 1980's and 1990's.)

So instead of gas that's $1.39/litre (~$4/gallon in the US) today, you could be looking at $4-5/litre gasoline ($15/gallon) in the very near future.

The other related issue is, of course, climate change.  Even if the earth did have unlimited supplies of oil, there has to be consideration of what the burning of so many fossil fuels are doing to our environment. 

(A digression – “fossil fuels” is a bit of a misnomer and many people think that oil fields are like the dinosaur version of elephant graveyards.  The reality is that oil fields were likely produced, not by dinosaurs but ancient micro-organisms and foliage.  A great way to understand this that I read somewhere: the weight of all the ants on earth is more than the weight of all elephants.)

Ethanol isn't the solution because, although it is renewable since it is fuel made from crops such as sugar cane and maize, it still involves burning which harms the environment plus it drives up the cost of those basic food crops.  (Mexico recently capped the prices for tortillas.)

The role of speculators, both in driving up the prices of food crops (see the last linked article) and of oil itself, can't be ignored either.  In fact, there are some that think the huge increase in oil prices in the last year doesn't have anything to do with peak oil and is completely based on self-fulfilling speculator prophecies (if you bet millions that the price of oil will go up, that will push the price up which leads other speculators to do the same and it becomes a vicious cycle which only end with a massive crash which will make 1929 look like a 16-year old learning to drive versus the coming crash which would be more like Evil Kinevil jumping over a canyon and not quite making it.)

Why am I writing this now?  I've always been interested in the idea of Peak Oil for all the different areas it brings into contact – economics, environmentalism, politics, geology, etc. – but now that the Saskatchewan economy is booming due to our oil and other natural resources, and having spent the last year living in the epicentre of the Saskatchewan oil & gas industry (Weyburn-Estevan), it's hitting especially close to homebi-.  (out of curiosity, I even went to the bi-annual Saskatchewan Oil & Gas Show in Weyburn last year – a place I never thought I'd find myself!)

Recent studies have declared that there is a “Saudi Arabia of oil” under Saskatchewan, Manitoba, North and South Dakota and Montana in the Bakken and Torquay formations (the blogger who posted the image below has downsized his initial estimate but it's still apparently the largest find in Canada since 1957). 

I drove out to Shea's farm with her family a few months ago and we didn't recognize the area.  The landscape now looks like the moon – instead of the never-ending greens, yellows and browns of the farm fields, there is just endless, flattened, black earth covered in rows of  pumpjacks. 

I've got a lot more that I could say but I hear a baby crying so I might come back to this topic later.  I do hope this has given you an introduction if you didn't know about peak oil and maybe some more info if you do!