Has oil production peaked?

• Author: Brown, Lester R.
• Position: EYE ON ECOLOGY

WHEN THE PRICE OF OIL climbed above $50 a barrel in late 2004, public attention began to focus on the adequacy of world oil supplies, specifically on when production would peak and then begin to decline. Analysts are far from a consensus on this issue, but several prominent ones now believe that the oil peak is imminent. Oil completely shaped our 20th-century civilization, affecting every facet of the economy, from the mechanization of agriculture to air travel. When production turns downward, it will be a seismic economic event, creating a world unlike any we have known during our lifetimes. Indeed, when historians write about this period in history, they may well distinguish between before peak oil (BPO) and after peak oil (APO).

The oil prospect can be analyzed in several different ways. One approach--use of the reserves-production relationship to gain a sense of future production trends--was pioneered several decades ago by the legendary geologist King Hubbert. Given the nature of oil production, Hubbert theorized that the time lag between the peaking of new discoveries and production was predictable. Noting that the discovery of new reserves in the U.S. had peaked around 1930, he predicted that U.S. oil production would peak in 1970. He hit it right on the head.

A second approach, separating the world's principal oil-producing countries into two groups--those where production is falling and those where it still is rising--is illuminating. Of the 23 leading oil producers, output appears to have peaked in 15. The post-peak countries range from the U.S. (the only country other than Saudi Arabia ever to pump more than 9,000,000 barrels per day) and Venezuela (where oil production topped out in 1970) to the two North Sea oil producers, the United Kingdom and Norway, where production crested in 1999 and 2000, respectively. U.S. oil output, which peaked at 9,600,000 barrels a day in 1970, dropped to 5,400,000 in 2004. Venezuela's output has dropped 31% since 1970.

The eight pre-peak nations are dominated by the world's leading oil producers, Saudi Arabia and Russia. Other countries with substantial potential for increasing production are Canada, largely because of its tar sands, and Kazakhstan, which still is developing its oil resources. The other four pre-peakers are Algeria, Angola, China, and Mexico.

The biggest question mark among these "elite eight" is Saudi Arabia. Its production technically peaked in 1980 at 9,900,000 barrels a day...