The “end” or “peak” of oil has indeed been announced several times in the past, without ever coming true. Originally, it was to an American geologist named Marion King Hubbert that we owe its first version, as far back as the 1950s. While working for Shell, Hubbert knew that oil reserves were not were not infinite, and he observed that the production of non-renewable resources followed the shape of a “bell curve” — a fundamental distribution curve in statistics.
From (roughly speaking), he predicted as early as 1956 that American oil production would reach its peak somewhere between 1965 and 1970. And that is indeed what happened, at least initially: in 1970 , the United States extracted oil from its soil at a rate of more than 9.6 million barrels per day, and its domestic production declined continuously thereafter, we read in a history of Hubbert's ideas published in last year in the Bulletins of the American Association of Petroleum Geologists.
For a long time, this was considered by many as “proof” (although it was still contested, both in geology and in economics, it should be noted) that Hubbert's model was valid and that world oil production would one day reach a maximum, then decline to bring us into an era of increasing scarcity of black gold.
Oops…
But there are always two things that can invalidate predictions like Hubbert's and the many other “peak oil” announcements that followed. First, if a resource becomes increasingly scarce, then its prices will increase and reserves that were previously not “economically exploitable” will become profitable. The scarcity will therefore be short-lived.
“In the mining sector, that's often the issue,” confirms physicist Normand Mousseau, director of the Trottier Energy Institute at the École Polytechnique de Montréal. But in the case of oil, there was something else too.”
This is because Hubbert's theory essentially assumed that the volume of exploitable reserves was known and would not change. However, we never know if technological progress will not one day make accessible reserves that were previously out of reach. And this is what happened with oil in the 2000s, when the technique called hydraulic fracturing was developed.
As a reminder, it consists of injecting large quantities of water (with a little sand and various chemicals) under high pressure into certain geological formations (shales) which contain hydrocarbons, which fractures the rock. The sand grains then prevent the cracks from closing, and the oil or natural gas that was held in the shale is then “released.”
An exploratory shale gas well in the St. Lawrence Valley. (Archives The Sun)
This new technique suddenly “created” immense reserves which were until then unexploitable. With the result that American oil production, which had declined little by little since the 1970s until reaching a low of five million barrels/day in 2008, subsequently picked up again and now well exceeds the ” Hubbert peak” of 1970 — Uncle Sam was extracting almost 13 million barrels per day last year.
In fact, the United States (re)became the leading oil producing country in the world in 2018, surpassing even Russia and Saudi Arabia.
So much for that peakas they say in English…
This obviously does not mean that oil can be exploited infinitely – the resources are indeed limited – but until now these predictions have all, eventually, proven false.
And not just those of Hubbert. For example, in 1998, geologists Colin Campbell and Jean Leherrère wrote an article entitled The end of cheap oilin which they predicted that global production was about to peak — they predicted it would be around 2004-2005.
They too had not foreseen the arrival of shale oil, and this idea of an imminent oil peak, or even a predictable one, has since been largely abandoned, we read in an article on the subject published in 2019 in Energy Research and Social Science.
At least, as far as production is concerned.
And the demand?
Because oil supply doesn't tell the whole story. There is another counterpart which is fundamental in any economic equation: demand. And from this point of view, the idea of a summit is still relevant.
Last year, the International Energy Agency modeled the commitments of the world's states, the rise of electric cars, the transition to cleaner electricity sources, and other such factors that influence the demand for oil. And it concluded that this demand is expected to peak around 2030, then gradually decline.
According to Mr. Mousseau, this prediction still has a reasonable chance of coming true.
“It will depend a lot on whether we manage to keep our promises of transition to electric transport,” he said. But there are countries where the majority of vehicles sold are already electric. And in many places, solar already produces electricity for less than fossil fuels. China even plans to be able to manufacture 1,200 megawatts (MW) of solar panel power per year by 2026.
“To give an idea, in Quebec, we only have 40 MW of installed power, even counting all the dams, so producing 1200 MW of solar panels each year is an absolutely immense figure, and it should bring down the price of solar electricity even more. So overall, we have figures that align with a peak in oil demand around 2030.”
We will of course have to wait for this to happen before definitively believing in it – after all, analysts at CitiGroup had already predicted the peak in oil demand before the end of the 2010s…
But in all cases, analyzes Mr. Mousseau, “it will not be a question of lacking oil that will make us stop consuming it. It’s going to be politics and the climate that, in a certain way, will end up imposing it.”
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