World Oil
When Will the Peak Hit?

Photograph by: Gerd Ludwig, National Geographic June 2008

Despite modern society's heavy dependence on oil for energy, most people are aware that the supply is finite. The trillion-dollar question for experts is, when will the oil supply peak? In other words, at what point will half of the world's reserves have been extracted? In 1956 geologist M. King Hubbert predicted that U.S. oil supplies would peak between 1968 and 1972. He was right—it peaked in 1970.

Today oil analysts have adapted Hubbert's formula as they try to calculate the world's oil supply. Some experts think we've already reached the halfway mark; others think we might not reach it until the middle of the century. But most analysts believe we'll reach it sometime between 2010 and 2020. Determining the peak is important, because once half the oil has been extracted from a reservoir, it becomes increasingly difficult, geologically and economically, to pump more from the same location. Companies often have to use expensive secondary recovery methods, including injecting massive amounts of water, to extract more oil.

The world's crude-oil output has risen from fewer than a million barrels a day in 1900 to 85 million barrels a day today. A significant portion of that oil fuels automobile and airplane travel, which took off in the 1920s and 1930s. Matt Simmons, a Houston investment banker who studies oil markets, says, "There are no wonder products invented so far to get us out of the jam we invented other than traveling far less."

In response to the International Energy Agency's 2007 estimate that oil demand would reach 116 million barrels a day by 2030, several top oil executives said they believe it's impossible to produce more than 100 million barrels a day. That's why it's vital to find new energy resources and create new infrastructure—which will take time. Current alternative technologies power only a small percentage of the world’s energy needs; oil accounts for about one-third of global energy use.

"Technologies such as solar cells, fuel cells, biorefineries, and wind turbines are in about the same place today that the internal combustion engine and electromagnetic generator occupied in 1905," writes Christopher Flavin, president of the Worldwatch Institute, an environmental think tank. "These key enabling technologies have already been developed and commercialized, but they are just now entering the world’s largest energy markets."

The diminishing of the planet's oil resources will have tremendous political and economic consequences. But the world has adapted before: The switch from wood to coal to oil offers proof that people can find ways to serve their energy needs. Creative minds now have a huge opportunity to come up with energy solutions before the oil runs out.

Crude oil is being extracted from tar sands in western Canada, but the process requires enormous amounts of water and energy, which often comes from natural gas. In Brazil, sugar cane produces fuel for cars, while in the U.S. ethanol fuel is made from corn, soybeans, and switchgrass. But ethanol can require large amounts of energy to produce, and its production has decreased world food supplies. Many experts believe that governments and energy companies must commit to developing new technologies such as harnessing nuclear fusion (energy from the sun) and improving nuclear reactors and power-grid efficiency. Wind energy and biofuels are gaining in popularity too. International energy giants Shell and BP are leading the world in renewable-energy investments; each has invested about $1 billion in the past five years.

Most analysts agree that an energy policy that stresses new technologies and energy conservation may be the most effective way to power the future. As Adam Goodstein, author of Out of Gas: The End of the Age of Oil, writes, "The best, most conservative bet for ameliorating the coming fuel crisis is the gradual improvement of existing technologies." Making lights more efficient, capturing solar power with cheaper photoelectric cells, and using nuclear power would all help conserve energy.

Roberts, Paul. "Tapped Out." National Geographic. (June 2008), 86-91

"Peak Oil Forum." Worldwatch Institute.

Raeburn, Paul. "They're Not Making More." New York Times, February 8, 2004.


Solar Energy Technologies. U.S. Department of Energy.

Worldwatch Institute.

Other Resources
Iraq oil fire.

Oil rig pumping oil.

Offshore oil rig.

Lewis, Nathan S. "Powering the Planet." Engineering & Science (No. 2, 2007).

Saudi Arabia

Saudi Arabia has 260 billion barrels of oil in its reserves, or about a fifth of the world's conventional oil supply. Its Ghawar oil field, with an estimated 120 billion barrels when it was discovered in 1948, remains the biggest reserve ever found and still produces more oil than any other field.

After reviewing oil data, Sadad I. Al Husseini—former head of exploration and production at Saudi Aramco, Saudi Arabia's state-owned oil company—predicted that in 2004 the world's production capacity would hit a plateau that would last 10 to 12 years, then slowly begin to decline. Other agencies have predicted that production would continue to rise until 2030. It's too soon to tell who's right.

Roberts, Paul. Tapped Out. National Geographic (June 2008), 86-91.

Saudi Arabia. U.S. Energy Information Administration.

Peak Oil Around the World

As countries face a decline in the oil supply, political conflict could arise. Recession and war have been associated with previous oil-supply fluctuations. During the Arab-Israeli conflict in the early 1970s, the Nixon administration even drew up contingency plans to take over Middle Eastern oil fields if necessary.

About 75 percent of the world's remaining oil is controlled by the Organization of Petroleum Exporting Countries (OPEC), whose members include Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. OPEC has considerable power over oil supply and pricing.

Big oil companies are always searching for new reserves, but several are already finding less new oil than they're currently producing—what's known as the replacement reserve ratio is diminishing. Moreover, output is plummeting in once abundant places such as Alaska's North Slope and the North Sea.

Politics are a factor in how much oil is pumped out of the ground. Edward Morse, a former State Department oil expert who now analyzes markets for the investment bank Lehman Brothers, says, "Were it not for political obstacles, Iran, Iraq, and Venezuela could together pump another seven million barrels a day."

Roberts, Paul. Tapped Out. National Geographic (June 2008), 86-91.

"Peak Oil Forum." Worldwatch Institute.


Last updated: April 11, 2008

Is the Pickens Plan that T. Boone Pickens is putting forth for real or just a pie-in-the-sky dream?
Dear Terry, Mr. Pickens is quite serious about his plan—he's spending tens of millions of his own dollars promoting it. His motives are probably both altruistic (reducing U.S. reliance on foreign oil) and self-serving (encouraging growth in wind generation, which he's investing in). There are many large obstacles to consider when judging the Pickens Plan. First, the infrastructure for using natural gas doesn't exist on a scale that's even close to what the plan requires. Without fueling stations, car buyers would be reluctant to invest in a natural-gas car, and without a sizable demand, energy providers would be reluctant to invest in natural-gas service stations. Natural gas has been used successfully in transportation when both the fueling stations and vehicles are operated by the same entity, such as a public transit authority or a corporation with a large fleet. The infrastructure costs for the country would be in the trillions of dollars. Second, North American natural-gas production is declining and will be much lower in ten years, resulting in less domestic natural gas to offset foreign oil. The U.S. might be able to acquire more foreign natural gas in the future, but that doesn't lead to less reliance on foreign energy. Third, U.S. oil production is 37 years past its peak and continues to decline. A decade from now -- even with full access to ANWR and the coastal U.S. for oil exploration and development -- domestic oil production wouldn't be as high as it is now. Which means we could be even more reliant on foreign oil in the future if domestic demand doesn't decrease. -- Scott Printz, GeoPedia Expert