SOCORRO, New Mexico (STPNS) -- In the previous piece we saw that the history of oil exploration in the United States suggested that production rises steadily to a peak, at around 50 percent of total oil reserves. This peak also marks the onset of declining production. This decline occurs without any plateau, beginning the year after peak, and declining inexorably at a rate between 1 percent and 2 percent per year. For the United States, this peak occurred in 1970, exactly 40 years after the peak of oil discovery in 1930.

Here we will apply the American experience to attempt to predict the timing of global peak oil, the time after which world oil availability will steadily decrease. The problem with such predictions is that many oil-producing countries exaggerate their true oil reserves, while Government agencies, including here in the USA, often accept such exaggerations.



A case in point is the clear exaggeration of the Organization of Petroleum Exporting Countries, or OPEC, oil reserves. It is never easy to precisely calculate how much oil remains in a field or a country, but prior to the 1980s OPEC reserve calculations were based on geological reality. However, at that point OPEC announced that the amount of oil that member nations could sell on the world market would be proportional to their oil reserves - more reserves, more exports, more money.

This led to a sudden jump in claimed oil reserves, in a single year?s time, and without any documented new discoveries. Table 1 (on page 4) documents the sudden appearance of what were clearly fictitiously inflated claimed reserves to justify larger market share. Even more remarkably, over the next decades in many of these same countries these claimed reserves never shrank, despite the annual sale of billions of barrels of oil. Since OPEC produces a third of global oil, these are clearly major exaggerations.

Although published reserve data are not believable, information on new oil discoveries is at least somewhat more reliable. Figure 1 totals such discoveries by decade. It is clear that new discoveries peaked globally in the decade of the 1960s, then plummeted. New discoveries in the 1990s were only a quarter of the 1960s peak. Moreover, annual production first exceeded annual new discoveries in 1986.

By 2005, annual new discoveries were only half of annual oil production. If the U.S. experience can be applied to global oil, the 40-year American gap between peak discovery and peak production would suggest a world peak right about now.

A variety of other independent estimates of the timing of global peak oil are roughly in agreement with a global peak sometime around now. Such estimates are based on a variety of techniques, and generally seem to suggest a global peak not earlier than 2005, nor later than 2015. Given the low quality of the data from many countries, this 10-year spread is about as good as can be expected.

Here much of the uncertainty revolves around Saudi Arabia. The kingdom continues to boast about a virtual oil cornucopia, but if Matthew Simmons and other independent observers are correct (references at the end of this article), Saudi oil production may already have peaked, and could be declining at a rate in excess of 3 percent per year.

If this is indeed the case, world peak should have occurred sometime around 2006. As figure 2 shows, we have indeed seen a peaking of world oil production to date at around 85 million barrels per day in May 2005. If this is not just a temporary plateau, we may already have passed world peak production. Certainly the current high price of oil and gasoline suggests that this may be so.  

Conclusion 1: The American experience of peak oil seems to generalize quite nicely to prediction of global peak oil.

Conclusion 2: World oil production will probably peak sometime between 2005 and 2015, with an early peak, perhaps even 2006, most likely.

Conclusion 3: Again based on the U.S. experience, we can expect world oil production to decline post-peak at a rate of around 1 to 2 percent per year.  

Robert Holson is a relative newcomer to Socorro, having lived here for only 10 years. He is a professor of psychology at New Mexico Tech.

References:  Simmons, Matthew. Twilight in the Desert: The Coming   Saudi Oil Shock and the World Economy. Wiley, 2006.  

Staniford, Stuart. ?A Nosedive Toward the Desert, or Why the Decline in Saudi Oil Production is Not Voluntary.? The Oil Drum, March 8, 2007, www.theoildrum.com/node/2331.