Proceedings of the
Second International Energy 2030 Conference,
November 4-5, 2008, Abu Dhabi, U.A.E.
Is There an Impending World Oil Peak?
Prof. Michael J. Economides
University of Houston, USA
Abstract
In 1859, right after the now-famous Colonel Drake well was drilled in Titusville, in the U.S. state of
Pennsylvania, shortages of the illuminant camphene caused by the Civil War made the price of oil shoot up
to $15 per barrel (more than $1,000 in today’s world). By the autumn of 1861, following a reckless race
for production and the 3,000-barrel-per-day Empire Well, the price had plunged to 10 cents a barrel, $7 in
today’s money. Four years later, newspapers in the Eastern U.S. were printing stories about running out of
oil.
Predictions of the future supply of petroleum have typically been far less accurate than predictions of
demand. Flawed predictions have caused public bewilderment, distrust and, more importantly, government
inaction or poorly conceived reactions. A constant theme, from the very infancy of the industry at the turn
of the 19th century, has been that the world is running out of oil. This worried governments in the 1930s
and 1940s, and became the main focus of public discourse following the energy crisis of 1973.
It is amusing to read both optimistic and pessimistic predictions of the future of oil from people who
have no clue about the basic fundamentals of the industry.
Recently, at least 10 well-known books have addressed the issue of “peak oil,” and the extraordinary
run-up in oil prices, experienced since 2000, is offered as an additional indicator that the world is running
out of oil. Much of the peak oil rhetoric is wishful thinking from two types of individuals, many of whom
are politically or ideologically tainted: environmentalists and anti-capitalists who for many, often irrational
reasons want the world to run out of oil, and those who are terrified of economic dependence.
For example, in his book, “Twilight in The Desert: The Coming Saudi Oil Shock and The World
Economy,” Matthew Simmons broadly hints that Saudi Arabia, the “mother of all oil producers,” is very
close to the “twilight” of its productive life. In our earlier book “The Color of Oil,” my co-author and I
predicted that the world will not run out of oil for at least the next three centuries. For natural gas, which
is rapidly becoming the fuel of choice, the scenario is even more optimistic. Even without taking into
account the enormous volume of gas hydrates, the world’s natural gas supply will last for at least several
centuries more.
As a Petroleum Engineer of course I know that oil and gas are depletable resources and that eventually
their production will peak. But peaking, which in my view will not happen for several decades and
certainly not before 2030, will not be the catastrophe that some people think and for certain it does not
mean that we will run our of oil as some even more ill-informed people and some parts of the press have
suggested.
