Hubbert's theory was virtually ignored--until people started to realize that Hubbert was right. In 1970, U.S. oil production peaked and has been falling ever since. Today, the U.S. produces roughly the same amount of oil as it did in 1940.
Hubbert used a number of statistical models to determine the growth and decline of oil production, but what was novel about his approach was his assertion that a crisis in production would occur not when the last drop of oil was pumped out of the ground, but when roughly half the existing reserves were depleted. After that point, the cost of pumping the remaining oil increases dramatically and is no longer attractive to oil companies hoping to make a profit.
This is just what happened in the U.S. beginning in 1970. It has also taken place in the North Sea off the coast of Britain in 1999, and most recently in a number of Gulf States, including Iran.
The U.S. has been able to compensate for declining domestic production by relying on imports. But a global peak in oil production would have disastrous effects on the world economy, as energy costs climbed in response to declining supply.
So when will global oil production peak? That has been the subject of heated debate among analysts.
The answer depends largely on computer estimates of how much oil we started out with. Conservative estimates put the world's oil supply at 2 trillion barrels. Given that we've already burned roughly 950 billion barrels and are currently burning close to 30 billion barrels a year, we should reach Hubbert's halfway point--when the cost of pumping oil increases dramatically--in just a few years.
More favorable estimates put world oil supply at closer to 3 trillion barrels. This assumes that in addition to the 950 billion barrels already consumed and the 1.15 billion barrels of "proven" reserves that still haven't been pumped, there are another 900 billion barrels in still undiscovered oilfields. It's worth pointing out that these undiscovered fields would have to be the equivalent of all the known oil in Asia, Africa and the Middle East combined.
In reality, discoveries of new oilfields are declining. Most of the huge "super fields" that supply most of the world's oil--such as Saudi Arabia's 80 billion barrel Ghawar field--were discovered in the 1950s and 1960s. The largest recent oil discoveries off the coast of Africa and in the Caspian Sea region are thought to hold only 1 billion barrels and 10 billion barrels respectively.
The result is that oil industry investment isn't going into new exploration, but into mergers and buyouts. "We've run out of good projects," said Matt Simmons, head of the oil investment bank Simmons & Co. International. "If these companies had fantastic projects, they'd be out there [developing new fields]."
Actually, despite the ferocity with which analysts debate the exact date at which oil production will peak, the estimates are not that different. The most dire predictions put the peak within the next few years. The most generous estimates put it sometime during the next four decades--hardly that much more reassuring.
THE BUSH administration's energy plan not only fails to address the scale of the crisis, it amounts to a massive giveaway to big business that will increase U.S. reliance on fossil fuels.
Bush's energy plan, passed in 2001, nearly doubled government subsidies for non-renewable energy sources from $33 billion to $62 billion over 10 years. It also opened the door to drilling in the Alaskan National Wildlife Refuge (ANWR)--a proposal that moved a step closer to reality with a Senate vote in March.
Drilling in ANWR will mean millions of dollars in profits for U.S. oil companies, but it will come at the cost of serious environmental damage--and it will do virtually nothing to alleviate the oil crisis. At best, ANWR would produce about 1 million barrels per day, less than 4 percent of total U.S. consumption. "Seen from this perspective," writes author Michael Klare, "ANWR is a sideshow--a minor distraction from the main story of growing U.S. dependence on imports."
Instead of pursuing research into alternative energy strategies, which would infringe on the immense profits of the oil and auto industries, U.S. energy policy is largely devoted to maintaining U.S. dominance in oil-producing regions.
One very serious consequence is that competition between states for control and access to oil remains a central issue for the world's major governments--the U.S. most of all--and one that will only increase in importance in the years ahead. Oil is the single most important and profitable commodity in the world. As author Michael Collon writes in his book Monopoly, "If you want to rule the world you need to control the oil. All the oil. Anywhere."
Faced with a growing reliance on imported oil, the Bush administration has been determined to ensure that governments in oil-producing regions continue to allow a steady flow of oil to the U.S.
At the top of the list is the Middle East--which accounts for two-thirds of the world's proven oil reserves. In a 2001 report prepared by former Secretary of State James Baker and presented to Vice President Dick Cheney, Baker wrote: "A trend towards anti-Americanism could affect regional leaders' ability to cooperate with the United States in the energy area." Baker went on to recommend that "the United States should conduct an immediate policy review toward Iraq, including military, energy, economic and political diplomatic assessments," with the goal "to eventually ease Iraqi oilfield investment restriction."
Thus, the occupation of Iraq is not simply about reaping oil profits for U.S. corporations--though that is no doubt a factor. It is a central part of the effort by the U.S. to maintain its domination over the largest oil-producing region in the world--and through that to maintain leverage over competing economic and political powers.
This is why the U.S. military has begun construction of 14 bases in Iraq--to keep a long-term presence in the region and ensure that the U.S. remains the pre-eminent power. Beyond Iraq, the U.S. also aims to use its military presence to prop up the dictatorship in Saudi Arabia, which accounts for 25 percent of the world's oil reserves and roughly 20 percent of U.S. oil imports.
Though the Bush administration has been more vocal and more aggressive in pursuing U.S. imperial goals, all this is not the neoconservatives' agenda alone--but has been the stated policy of the U.S. government under both Democratic and Republican administrations.
Thus, in response to the 1979 revolution in Iran that brought an Islamist government to power, then-President Carter announced his intention to use whatever military might was necessary to maintain U.S. access to Middle East oil. A Rapid Deployment Force was formed with the intention to guard against "any attempt by any outside force to gain control of the Persian Gulf region, [which] will be regarded as an assault on the vital interests of the United States."
Since then, September 11 gave the U.S. government the excuse to be more aggressive in both strengthening its presence in the Middle East and expanding its presence into new areas.
The most significant of these new regions is the Caspian Sea. Some estimates put Caspian Sea oil and natural gas reserves at 200 billion barrels. This doesn't approach the size of Middle East reserves and would be more costly to extract than Middle East oil, but they are of growing importance.
Recent evidence suggests that Middle East oil production may be nearing its peak. Currently, every country in the Persian Gulf is pumping at, or exceeding, capacity. And reports have emerged that by exceeding capacity, Saudi Arabia may have damaged several of its giant oilfields. If true, this would mean a serious energy crisis.
The recent oil and natural gas finds in the Caspian Sea represent the most significant sources of untapped oil and natural gas in the world. It is one of the only regions of the world where oil and natural gas production is expected to increase over the next 30 years. Dick Cheney, while he was still president of Halliburton, noted: "I can't think of a time while we had a region emerge as suddenly to become strategically as significant as the Caspian."
The U.S. has used its war and occupation in Afghanistan to significantly strengthen its military presence in the neighboring Caspian Sea region. Since September 11, Washington has constructed military bases in Kazakhstan, Uzbekistan and Turkmenistan, and has signed security pacts with Azerbaijan and Georgia.
U.S. expansion into the region has already produced conflicts with Russia, which up until the collapse of the USSR controlled the Caspian Sea region, and China, which is seeking to establish access to new sources of oil to maintain its rapid expanding economy. Any sustained decrease in oil production on a global scale would make the Caspian Sea, along with the Middle East, a major flash point for international conflict.
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GIVEN THE scale of this crisis in the making, it is astonishing how little preparation has gone into researching alternative energy sources.
The Bush administration has called for increased research into more fuel-efficient vehicles, including hydrogen-powered fuel cell vehicles, but at the current level of funding, it will be decades before such products will be available on any wide scale. In the meantime, the administration has refused to push for more fuel-efficient cars.
The Democrats tout an alternative that would require all new cars to get 35 miles per gallon by 2013, and renewable energy to comprise 10 percent of all retail electricity by 2020. That's barely a drop in the bucket--even if the Democrats were willing to put up a fight to win it.
Viable technology already exists for all vehicles to surpass 40 miles per gallon. But even the inadequate measures proposed in Washington have withered when confronted with opposition from big business, especially the oil and auto industries.
A viable program for renewable energy will have to confront and overcome opposition from big business. That won't come from the politicians of the two mainstream parties, who are wedded to those same corporate interests--but from a movement from below, which can put human need before corporate greed.
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