Scraping the barrel

The predictions of the ‘peak oil’ doomsday cult have been wrong in the past – and they’re wrong again now

There are good reasons why the world should wean itself from oil – but the doomsday cult of peak oil isn’t one of them.

The theory has been around for as long as people have been extracting oil. It has been getting its predictions of the end wrong, repeatedly, for just as long. It’s hard to keep track, but the latest forecasts say we’ll reach the peak as early as 2010. Kenneth Deffeyes, the Princeton professor who is a doyen of the movement, even says it happened in 2005.


Just because the predictions have been wrong before doesn’t mean they’ll be wrong next time. And there is a grain of truth to peak oil theory. Oil is a finite reserve, so the more we extract, the closer we come to exhausting the resource.

The theory’s proponents – a rag-bag of geologists, green activists, Malthusians, and people who yearn for a return to some pre-industrial idyll – are making noise again now because the price of oil is so high and western nations are struggling to increase their production and replace their reserves.

But those are spurious connections. Oil might be pricey by historical measures, but it isn’t by others. Compare, for example, the cost of a barrel of crude with a barrel of coca-cola: $100 vs $204. Speculation, refinery bottlenecks, the fall of the dollar, geopolitics, and rising costs of steel and other materials used by companies to produce oil are driving the price. Relentless demand from Asia is one of the few fundamentals that are playing a role. Opec said after its meeting this week that the oil markets are “well-supplied” – and the group has a point. In the US, crude stocks are above five-year averages.

Guardian