Crisis may prime the pumps

The rise and rise of oil prices is renewing interest in the “peak oil” theories which originated in 1956 when the geologist M King Hubbert predicted that US oil production would peak in about 1970, which it did. While demand has risen sharply in recent years because of the strongest performance of the world economy for decades, oil supply has increased far more slowly, leading to the price we have today.

Some of the price rise has been blamed on speculation, some on the decline of the dollar, in which oil is priced, but most analysts agree that this oil price shock is demand-led rather than being the result of an interruption to supply, as in 1974 and 1979.


The peak oil theorists argue that production has not increased in line with demand simply because it cannot. Oil reserves are finite. Many of the world’s biggest fields are already suffering declining output, and that could accelerate, they argue.

One leading proponent of the theory, the German-based Energy Watch Group, recently argued that global oil output peaked in 2006 and will halve by 2030, rather than rise from the current 85m barrels per day (bpd) to 120m, as conventional projections suggest.

Guardian