What an anticlimax. Not a word. No fanfare. Peak Oil has passed us by and nobody even noticed.

It’s not for certain but many experts(1) say that July 2008 was it – the moment in time when the world passed over the top of Hubbert’s peak. From here on in global oil production is on the decline. The maximum rate achieved was 87million barrels per day, enough to drain 4 Olympic size swimming pools every minute(2). The world could probably have reached a higher figure where it not for what happened next.

Since 2005 production has been more or less flat despite growing demand in developing countries. At the same time prices have risen steadily at 30% per year over the same period(3). That all came to an end last year at $147 a barrel, a price that the industrial economy could not sustain.

Ironically, the subsequent recession, rather than postponing peak oil, could make the situation worse. Today’s low oil prices are below the investment costs needed to bring new projects to market (deep water costs $70 a barrel, tar sands $100 a barrel)(4). This is great news for climate change but bad news for the economy. As companies delay investments and cancel projects future production capacity is being eroded. Sooner rather than later declining supply will catch up and overtake declining demand.

Sadly, now that the oil price has crashed the general perception is that peak oil has gone away and we can all go back to sleep. On the contrary. The International Energy Agency has admitted that the average decline rate of fields that have passed their peak of production is 6.7% per year and that massive investment is needed to sustain global production, an investment that looks more and more unlikely in the current financial climate(5). As if to back this up Mexico – 3rd largest supplier to the U.S., reported a 6% overall drop in production last year(6), Norway – the world’s 5th largest oil exporter, predicts a drop of 9% this coming year(7) and oil company Oilexco is cancelling projects in the North Sea.

Peak Oil = Peak Energy = Peak Economy. I always thought it would be a momentous occasion making headlines around the world. The truth, as Sharon Atysk has pointed out, is that we will probably only know for certain in a few years time, at which stage it will be an anticlimax as we may be mired in a climate, energy and economic crisis of our own making.

Notes:

1. Say Goodbye to Peak Oil – Richard Heinberg

2. A Thousand Barrels a Second – Peter Tertzakian

3. Peak Oil, A Change in Direction – Phil Hart, ASPO Australia

4. Natural Gas Cliff and Credit Situation – Nate Hagens, The Oil Drum

5. At Last, A Date – George Monbiot

6. Mexican Oil Exports: Start saying Adios – Energy Bulletin

7. Norway sees oil production falling 9.7% this year – Oil Depletion Analysis Centre