Energy Economics by Peter Zweifel Aaron Praktiknjo & Georg Erdmann

Author:Peter Zweifel, Aaron Praktiknjo & Georg Erdmann
Language: eng
Format: epub
Publisher: Springer Berlin Heidelberg, Berlin, Heidelberg

8.1.3 Peak Oil Hypothesis

Motorization in the United States led to a phenomenal increase in oil consumption during the 1950s. It was during this decade that geologists began to address the question of how long it would take for crude oil reserves in the United States to be depleted. At that time, the U.S. share in global production exceeded 50%. In 1956, geologist Hubbert (1956, 1962) predicted that oil production in the United States would peak by 1970 and decline from then on (in the so-called lower 48 states, thus excluding production in Alaska and offshore drilling in the Gulf of Mexico).

His forecast proved true (see Fig. 8.3). It was based on a logistic function, which in the present context implies that the accumulation of production will approach an upper limit which equals total reserves (see Fig. 4.​2). More specifically, according to the standard logistic function, rates of production begin to decline once one-half of total reserves have been retrieved (this is also known as the depletion midpoint ). By fitting observed production rates to the logistic function, Hubbert was able to determine the two parameters determining the logistic function, which in turn permits to predict the depletion midpoint and hence the year when the rate of production will attain its maximum.

Fig. 8.3Crude oil extraction in the United States (source: EIA, CGES)

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