1970 came out of the wrenching changes demanded by that new reality.
Figure 1.1. The Hubbert Curve
One of the basic tools of petroleum geology, the Hubbert curve predicts the total production of petroleum from an oil well. Peak production comes when about half of total production has already taken place.
The peak of US oil production came as a surprise only to those who werenât paying attention. Decades before, a petroleum geologist named M. King Hubbert worked out equations that predict in advance how much oil you can get from a well. 1 Oil is viscous stuff, and it takes time to move through pores and crevices in the rock that contains it. When an oil well pierces the rock and starts drawing out oil, the flow starts off slowly, gradually rises to peak production, and dwindles away just as gradually to nothing. Normally this works out to a bell-shaped curve, the Hubbert curve, that ranks today as one of the basic tools of petroleum geology.
Hubbertâs discovery, however, had wider implications. The same curve, he found, was just as effective a way of tracking production from oil fields, oil provinces (regions with similar geological features), and the oil reserves of entire nations. Itâs worth taking the time to understand how this works, because both the crisis of the 1970s and the larger crisis taking shape around us today both unfold from it. Production from a field, an oil province, or a country starts off slowly, just as with an oil well, because it takes time and investment to find the right places to drill. As the first few wells start producing, more wells are drilled, and total production rises. Eventually, though, the rising curve of production runs into the awkward fact that any given field, oil province, or country only contains so much oil.
This impacts production in two ways. First, as the number of wells rises, it gets harder to find more places where oil can be drilled. Second, old wells start to run dry as each one follows its own âHubbert curve, and so rising production from new wells starts to be offset by dwindling production from older ones. Sooner or later, these two factors overtake the rate of new oil production, and the field, province, or nation tips into decline. On average, this happens when about half the recoverable oil has been pumped out. Thereâs still plenty of oil in the ground when this happens, and much of it may not even be discovered by then, but each new well drilled after the peak simply helps take up some of the slack from older wells that are running dry.
All through the early 1950s, Hubbert tried out his curve on oil field data from around the world and refined his equations. In 1956 he took the next step by predicting publicly that oil production in the United States would peak about 1970, and then enter a permanent decline. Almost everyone in the oil industry dismissed his claim as nonsense. The conventional wisdom insisted that better technology and increased investment would keep US domestic oil production rising into the far future.
As the numbers came in during the early 1970s, though, it became clear that Hubbert was right. Despite immense investment, dramatic new technological advances, and federal tax policies that amounted to a trillion-dollar giveaway to the American oil industry, production peaked and then began to shrink right on schedule. That peak and decline gave the newly founded Organization of Petroleum Exporting Countries (OPEC) the leverage they needed to force the price of oil upward. Then, when the United States sided with Israel in the 1973 Yom Kippur War, OPEC was able to impose an oil embargo that came close to bringing the US economy to its knees.
Hubbert was not finished, though. In 1970, armed with the best current estimates of world oil reserves, he took his curve one step further and applied it to the entire world. His calculations predicted that oil production for the entire planet would crest around 2000, and decline
Figure 1.1. The Hubbert Curve
One of the basic tools of petroleum geology, the Hubbert curve predicts the total production of petroleum from an oil well. Peak production comes when about half of total production has already taken place.
The peak of US oil production came as a surprise only to those who werenât paying attention. Decades before, a petroleum geologist named M. King Hubbert worked out equations that predict in advance how much oil you can get from a well. 1 Oil is viscous stuff, and it takes time to move through pores and crevices in the rock that contains it. When an oil well pierces the rock and starts drawing out oil, the flow starts off slowly, gradually rises to peak production, and dwindles away just as gradually to nothing. Normally this works out to a bell-shaped curve, the Hubbert curve, that ranks today as one of the basic tools of petroleum geology.
Hubbertâs discovery, however, had wider implications. The same curve, he found, was just as effective a way of tracking production from oil fields, oil provinces (regions with similar geological features), and the oil reserves of entire nations. Itâs worth taking the time to understand how this works, because both the crisis of the 1970s and the larger crisis taking shape around us today both unfold from it. Production from a field, an oil province, or a country starts off slowly, just as with an oil well, because it takes time and investment to find the right places to drill. As the first few wells start producing, more wells are drilled, and total production rises. Eventually, though, the rising curve of production runs into the awkward fact that any given field, oil province, or country only contains so much oil.
This impacts production in two ways. First, as the number of wells rises, it gets harder to find more places where oil can be drilled. Second, old wells start to run dry as each one follows its own âHubbert curve, and so rising production from new wells starts to be offset by dwindling production from older ones. Sooner or later, these two factors overtake the rate of new oil production, and the field, province, or nation tips into decline. On average, this happens when about half the recoverable oil has been pumped out. Thereâs still plenty of oil in the ground when this happens, and much of it may not even be discovered by then, but each new well drilled after the peak simply helps take up some of the slack from older wells that are running dry.
All through the early 1950s, Hubbert tried out his curve on oil field data from around the world and refined his equations. In 1956 he took the next step by predicting publicly that oil production in the United States would peak about 1970, and then enter a permanent decline. Almost everyone in the oil industry dismissed his claim as nonsense. The conventional wisdom insisted that better technology and increased investment would keep US domestic oil production rising into the far future.
As the numbers came in during the early 1970s, though, it became clear that Hubbert was right. Despite immense investment, dramatic new technological advances, and federal tax policies that amounted to a trillion-dollar giveaway to the American oil industry, production peaked and then began to shrink right on schedule. That peak and decline gave the newly founded Organization of Petroleum Exporting Countries (OPEC) the leverage they needed to force the price of oil upward. Then, when the United States sided with Israel in the 1973 Yom Kippur War, OPEC was able to impose an oil embargo that came close to bringing the US economy to its knees.
Hubbert was not finished, though. In 1970, armed with the best current estimates of world oil reserves, he took his curve one step further and applied it to the entire world. His calculations predicted that oil production for the entire planet would crest around 2000, and decline