Peak Oil

http://en.wikipedia.org/wiki/Peak_oil

Peak oil, an event based on M. King Hubbert's theory, is the point in time when the maximum rate of petroleum extraction is reached, after which the rate of production is expected to enter terminal decline. Peak oil theory is based on the observed rise, peak, (sometimes rapid) fall, and depletion of aggregate production rate in oil fields over time. Mostly due to the development of new production techniques and the exploitation of unconventional supplies, Hubbert's original predictions for world production proved too conservative. Peak oil is often confused with oil depletion; peak oil is the point of maximum production, while depletion refers to a period of falling reserves and supply.

Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, predict negative global economyimplications following a post-peak production decline and oil price increase because of the high dependence of most modern industrialtransport, agricultural, and industrial systems on the low cost and high availability of oil. Predictions vary greatly as to what exactly these negative effects would be.

Optimistic estimations of peak production forecast the global decline will begin after 2020, and assume major investments in alternativeswill occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used. Pessimistic predictions of future oil production made after 2007 stated either that the peak had already occurred, that oil production was on the cusp of the peak, or that it would occur shortly.

The Demand for OIL

The demand side of peak oil over time is concerned with the total quantity of oil that the global market would choose to consume at various possible market prices and how this entire listing of quantities at various prices would evolve over time. Total global quantity demanded of world crude oil grew an average of 1.76% per year from 1994 to 2006, with a high growth of 3.4% in 2003–2004. After reaching a high of 85.6 million barrels (13,610,000 m³) per day in 2007, world consumption decreased in both 2008 and 2009 by a total of 1.8%, despite fuel costs plummeting in 2008.^[12] Despite this lull, world quantity-demanded for oil is projected to increase 21% over 2007 levels by 2030 (104 million barrels per day (16.5×10⁶ m³/d) from 86 million barrels (13.7×10⁶ m³)), due in large part to increases in demand from the transportation sector. According to the IEA's 2013 projections, growth in global oil demand will be significantly outpaced by growth in production capacity over the next 5 years.

Concerns over stated reserves

“	[World] reserves are confused and in fact inflated. Many of the so-called reserves are in fact resources. They're not delineated, they're not accessible, they’re not available for production.	”
	— Sadad I. Al-Husseini, former VP of Aramco, presentation to the Oil and Money conference, October 2007.

One difficulty in forecasting the date of peak oil is the opacity surrounding the oil reserves classified as 'proven'. Many worrying signs concerning the depletion of proven reserves have emerged in recent years.This was best exemplified by the 2004 scandal surrounding the 'evaporation' of 20% of Shell's reserves.

The Total reserves Available.

Al-Husseini estimated that 300 billion barrels (48×10⁹ m³) of the world's 1,200 billion barrels (190×10⁹ m³) of proven reserves should be recategorized as speculative resources.