Following the recent rise in oil prices, the term peak oil has become a popular buzzword. Although the term peak oil can refer to peak in oil production regardless of cause, it is most commonly understood as a peak in resulting from the draining of oil reserves. Predictions on the potential timing of such a peak vary, but some sources predict that the earth could reach peak oil within the next decade or so. However, Radetzki (2010) warns that predictions of an imminent peak in oil production should not be taken seriously, as the major arguments made for this coming peak by groups like the Association for the Study of Peak Oil (ASPO) are largely fallacious with little scientific or economic support. Radetzki goes on to state that a peak in oil production is conceivable, but it would be caused by political or market forces, not a decrease in availability. —Steven Erickson
Radetzki, M., 2010. Peak oil and other threatening peaks—chimeras without substance. Energy Policy 38, 6566–6569.
Radetzki scrutinized several of the main arguments made by the ASPO in regards to a supposed coming peak in oil production. These arguments include the fixed and limited nature of base oil reserves, that a peak in oil production would occur when half of the ultimately recoverable resources (URRs) are exploited, and that oil discoveries are declining and insufficient to meet the unending increase in demand. Radetzki works to discredit each of these arguments, claiming that they are only “chimeras”.
Radetzki’s first addresses the assertion that oil will peak when half of the URR has been consumed. She states that although oil fields do reach peak production when about half of the exploitable oil is used up, but there is no convincing reason that this should hold true for global oil production. She goes on to explain that even if this were the case, we lack the ability to ascertain when this halfway point has been reached, as even “resource pessimist” Colin Cambell, a leading player in the Peak Oil Movement, has added 300 billion barrels to his estimates from the URR. Radetzki states that due to the steady advance of technology, the URR is not a simple sum of total resources that can be easily burned through, but rather a result of fluid processes which result in its continual expansion. This holds especially true with oil prices over $60 per barrel, as this makes many novel methods of oil extraction more plausible.
Radetzki goes on to consider problems raised concerning the slowdown in oil discovery in recent decades. Radetzki explains that the ASPO’s data on the diminishing size of new discoveries is underestimating the total amount of oil being found. This is largely because they ignore an important concept called appreciation. The amount of oil first estimated in a new field is normally about six times smaller than actual reserves due to continuing development of the field and improvement in recovery technology. In the ASPO’s comparisons they use the figures from the fully appreciated oil discoveries in the 60’s and the 70’s, but use the preliminary estimates for newer discoveries, ignoring any appreciation that might occur. It is in this way that, although the quantity and size of new discoveries appears to have slowed, we still see increases in the base reserves.
Radetzki concludes that although peak oil is a possibility, it will not be due to limited resources. Instead, the economics of energy may change, making newer methods of energy generations preferable to the burning of fossil fuels. If this occurs then demand will naturally fall and production of oil will peter out. Another threat to oil production is resource nationalism—the majority of exploitable oil is controlled by governments—which would effectively cut off certain countries from the natural wealth of resource rich countries. This would indeed cause a production crisis in effected countries, and according to Radetzki is much more likely than an exhaustion of our useable reserves.