Ever since M. King Hubbert first outlined his peak oil theory, suggesting that the rate of petroleum production tends to follow a bell-shaped curve, it has been the source of much debate. Even though US Lower 48 states annual oil production did indeed peak in 1970, as he had predicted, the anticipated steady and inevitable decline has not followed, having been abruptly reversed in recent years by the rapid increase in production as a result of exploiting unconventional resources. Broad estimations about the industry’s future always have a high chance of being proved wrong, because it is almost impossible to second guess the technological, political and societal changes that feed into a topic of such global significance as energy supply.
In recent years, however, the discussion has migrated to the topic of peak oil demand, rather than production. The conversation had been about finding sufficient resources to supply an ever-increasing population, coupled with rapid economic and technological developments in Asia. A world falling out of love with fossil fuels, the growth of alternative, renewable sources of energy and concerns over carbon emissions are all issues which were not considered when production was the primary concern.
Predicting peak oil demand is proving as contentious as foretelling peak oil production. Statoil believes that demand will start slowing between the mid-2020s and late 2030s, while Ben van Beurden, CEO of global giant Shell, said at the recent IHS CeraWeek that we should be ready for oil (though not gas) demand to peak between 2025 and 2030, and that “the most difficult challenge… is to have a meaningful discussion with the public on energy transition. The discussion is not rational, it is emotional.” Not everyone agrees with this forecast. The CEO of Chevron is cited as saying that the idea of peak demand is merely “wishful thinking”, and the International Energy Agency recently said that lack of new investment means that oil supply could struggle to keep pace with demand after 2020.
Predicting the future of oil is a difficult and controversial game and many experts have been caught out in the past, ever since David White, chief geologist of the US Geological Survey, forecasted that the peak of US petroleum production would soon be passed, possibly within three years. That was in 1919.