The peak of oil production
Timings and market recognition
Pedro de Almeida
, Pedro D. Silva
Computer Science Department, University of Beira Interior, Covilha˜, Portugal
Electromechanical Department, University of Beira Interior, Covilha˜, Portugal
a r t i c l e i n f o
Received 25 September 2008Accepted 6 November 2008Available online 13 January 2009
Energy marketsPeak oil productionOil prices
a b s t r a c t
Energy is essential for present societies. In particular, transportation systems depend on petroleum-based fuels. That world oil production is set to pass a peak is now a reasonably accepted concept,although its date is far from consensual. In this work, we analyze the true expectations of the oil marketparticipants about the future availability of this fundamental energy source. We study the evolutionthrough time of the curves of crude oil futures prices, and we conclude that the market participants,among them the crude oil producers, alreadyexpect a near-term peak of oil production. This agrees withmany technical predictions for the date of peak production, including our own, that point to peak datesaround the end of the present decade. If this scenario is conﬁrmed, it can cause serious social andeconomical problems because societies will have little time to perform the necessary adjustments.
2008 Elsevier Ltd. All rights reserved.
Energy is the lifeblood of present human societies. Withoutcommercial energy (e.g. electricity, natural gas, crude oil and itsreﬁned products, coal, and biomass energy products that enterformal commercial circuits) societies as we know them wouldcrumble. In particular, fossil fuels are essential for electricitygeneration and also to propel modern transport systems. How-ever, in the last few years serious concerns about the futureavailability of those non-renewable fuels have been brought topublic discussion. In particular, the production of crude oil seemsunsustainable in a relatively short time frame, and even if thepresent levels of production can still be somewhat increased inthe next few years, that increase will probably be insufﬁcient tomatch the rapidly growing consumption in countries like China,India, Iran, or Saudi Arabia. At present, the growing tightnessbetween world production and demand has already caused asigniﬁcant rise in oil prices, seriously affecting most worldeconomies. These facts, together with growing concern aboutCO
emissions, are inducing most countries to increase theproduction of renewable energies. However, most of the relevantrenewable energy production techniques are related to theproduction of electricity, not liquid fuels, and so their impact inthe transport sector is limited.The most recent statistical data fromIEA (2007)indicates thatthe fossil energy is about 81% of the total commercial energyconsumed in the world
and about 98% of the energy used in thetransport sector. These percentages show that, at present, thecombined alternatives to fossil energy represent a relatively smallproportion of the total energy consumed, and a negligibleproportion of the energy used in the vital transportation sector.The very limited present share of the renewable energies is due toimportant problems that most of them still face, in terms of economic competitiveness of the present technology. Since theseproblems still prevent a fast ramp-up of the most promisingalternatives, there seems to be no escape from the dependence onliquid fossil fuels for the foreseeable future. However, theproduction of those fuels (mainly crude oil) is approaching amaximum, and will then begin to decline (Hubbert, 1949;Campbell and Laherre`re, 1998;Campbell and Heapes, 2008), a
phenomenon termed ‘‘Peak Oil’’ (PO). Although disputed whenﬁrst presented, the general idea of a future peak of oil productionis now well accepted. The time frame for that peak, however, isstill under discussion. Although most of authors that study thissubject already expects a near-term PO, some of them stillmaintain that the peak of oil production is so far away in time asto be irrelevant ( Jackson, 2006). In addition, several authors arealready pointing to concerns about a relatively near-term ‘‘peakgas’’ (Laherrere, 2003a;Simmons, 2007), as well as a somewhat
more distant ‘‘peak coal’’ (Hubbert, 1971;Zittel and Schindler,
2007). At present, conventional crude oil is the most important of the fossil fuels and it is all but certain that its depletion process is
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The other (non-fossil) sources of energy are nuclear (6.3%), hydro (2.2%),geothermal and solar (0.5%), combustible renewables and waste (10.0%). Electricityis not an energy source as such but depends on the conversion of the previouslyreferenced energy sources.Energy Policy 37 (2009) 1267–1276