Consumption of oil is rapidly approaching the critical point of peak supply. The concept of peak supply can be demonstrated rather simplistically, for example, by the rapid rise and fall of a yeast population as their ‘fuel,’ sugar, is consumed during fermentation. Similar to yeast’s dependency on sugar, humanity has prospered on the back of fossil fuels including oil, and human population has exploded. As yet, this dependency has progressed largely unabated with little attempt to curb the oil use that has brought about unprecedented development. Accordingly, the following question posed by Richard Heinberg on a lecture tour in 2006 was done so only partially tongue-in-cheek, and that is, “are human beings smarter than yeast?”
From this point of view it is easy to see that the question of ‘when will the world run out of oil,’ the focus of much discussion and debate, is both non-sensical and irrelevant. The real problem is one of supply and demand, which in regard to oil, has been well understood and studied for a number of decades. Possibly the most widely reported theory is that of the geophysicist M. King Hubbert, who theorised that oil production would follow an approximately bell-curve shape. He estimated that production of oil in the United States would peak between 1965 and 1975 (which proved correct) and that the global production peak “should occur within about half a century” of publication (Hubbert 1956).
The actual timing of the peak remains a contentious issue and different organisations have put forward vastly different predictions. The Association for the study of Peak Oil and Gas founded by geologist Colin Campbell currently predicts the peak in production to occur around 2010. Oil companies and government agencies, on the other hand, typically produce more optimistic predictions, with the US Geological Survey on the upper end of the scale predicting a peak in 2044. Others attempt to skirt around the topic with wording such as “Shell’s long-term energy scenarios have consistently explored the requirement to reduce oil demand around 2020.”
Even with peak theories aside, other basic assumptions of present oil supply are highly concerning in their own right. In an interview with Foreign Policy, Matthew Simmons, an energy industry investment banker, succinctly stated the precarious situation:
We’ve built the global economy based on the false assumptions that oil is just another commodity, that the Middle East has basically unlimited amounts of oil, technology will improve, and that the price of oil would get progressively cheaper. (Foreign Policy 2005)
These flawed assumptions are now being met by the realities of a highly politicised global supply chain. Even the United States government now acknowledges that its oil consumption is somewhat counterproductive given its ability to indirectly fund anything from insurgencies in the Middle East to the government of Venezuela. This corruption of ideologies is a direct by-product of the fierce battle raging between current and emerging consumers of oil in their quest to secure long-term supply for their respective nations. Take China, for example, which in the first half of 2006 increased crude oil and refined product imports by 17.6% and 48.3% respectively. It is not hard to see why the United States, which presently consumes around one-quarter of global oil supply, may consider these statistics a threat.
Whilst it is clear oil won’t simply run out, if demand continues to rise in line with predictions, its supply will become increasingly unreliable and uneconomic. Ultimately, it will be this economic indicator (the price of oil) which is set to be the most pervasive of factors in triggering a global change in direction in fuel choice for transportation. At what speed this change can be undertaken will determine the impact of the imminent collision between geological realities and the quest for ever more oil.
This is an edited excerpt from Opportunities for Vehicle Integrated Photovoltaics.