Sir Edmund Hillary once famously quoted on expedition to the Mt Everest: “It is not the mountain we conquer but ourselves”. Half a century later these words have begun to resonate in our heart, mind and soul as the World seemingly faces another peak, “Peak Oil”.

You may have heard of this peak on the grapevine, or in some casual conversation while enjoying a cuppa. Or more recently you may have seen on the telly big corporations citing years of research trying to curb this Mytho-Statistical Peak.

Yes the peak exists on papers, charts, and tons of statistical calculations. Sorry no photo-op while conquering this peak. Marion King Hubbert a scientist and geophysicist in the research labs of Shell Corporation submitted a paper in 1956 proposing a highly controversial theory on oil production and depletion thereof.

‘The Hubbert Peak theory posits that for any given geographical area, from an individual oil field to the planet as a whole, the rate of oil production tends to follow a bell-shaped curve. Early in the curve (pre-peak), production increases due to the addition of infrastructure. Late in the curve (post-peak), production declines due to resource depletion.’ [Source: WikiPedia]

In simpler words, oil production tends to increase with added efforts and resources towards the production, but the oil reserves will decrease the more you pump them out. Well it all sounds a bit familiar. Yes oil is a natural resource, and yes we do not have endless supply of oil, and yes we are a World of oil hungry economies with our SUVs and V8s and endless consumption of electricity, and yes we are simply careless about all that, and yes the Oil economies of the World have assured us of centuries of oil reserves. WAIT!! That’s where the elusive Peak Oil comes in picture.

Derived from Hubbert’s Peak Theory, Peak Oil refers to that particular time frame, when the oil supply will simply start to deplete towards a slow and sure terminal state. And this event in the history, around 2010, can be derived from the following graph from ASPO:

ASPO [Association for the Study of Peak Oil and Gas] was founded by Colin Campbell in 2000 with Jean Laherrère a French petroleum geologist with whom he wrote an important article in Scientific American in 1998 called “The end of cheap oil”. ASPO is the most influential organization supporting the “peak oil” theory known as the Hubbert curve, devised by M. King Hubbert, which predicts future oil availability.

Now don’t yet get that grocery list ready with all the supplies for that doomsday scenario supposedly occurring in 2010. This is a theory based on statistics and not on scientific formulas and equations. Also this is not an event which will cause floods or tsunamis or market crashes. This is a time-frame according to the theory. And the time frame has changed many times since the theory was proposed.

Following graph shows the movement of Peak Oil time frame that has changed over the time from ASPO:

[Graph b]

What we need to understand is that according to the theory the World Oil production will start to slowly decline. But have a close look at the ‘Graph a’ around 1970s. The Peak Oil was previously reached around 1970. That phase famously called the Oil Shock was due to political scenario that occurred in the Middle East due to the Yom Kippur War. The Middle East oil producing countries refused to supply oil to nations that were assisting Israel. This caused havoc in the West and US where gas stations were closed indefinitely, queues for petrol was formed for miles, and markets became very volatile. If you were living in those times you simply followed the tag line of US administration ‘Don’t be Fuelish’

There are some known facts which tend to support the theory of Peak Oil.

• Since the 4th quarter of 2004, world oil production appears to have levelled off. It averaged 84.1MB/day in 2005, up 1.1MB/day (1.3%) from 83.0MB/day in 2004.
• Production in Q2 2006 was 85.1MB/day, up 0.5MB/day (0.6%) from the same period a year earlier and up 2.8MB/day (3.4%) from Q2 2004.
• Average yearly gain in world oil production from 1987 to 2005 was 1.2MB/day (1.7%); yearly gains ranged from -1.4MB/day (-1.9%; 1998-1999) to 3.3MB/day (4.1%; 2003-2004).

According to J.H. Laherrère ‘Hubbert’s modelling technique has been variously applauded and criticised, but the constraints to its application have not been widely appreciated. It works well only where applied to a natural domain, unaffected by political or significant economic interference; to areas having a large number of fields; and to areas of unfettered activity. Hubbert himself worked primarily on the US-48, which had the necessary characteristics to be well modelled by a single cycle.’

Due to the nature of oil and its derivatives, the issue of oil production failing or falling is measured in terms by the raising oil prices. The world is becoming increasingly dependent on oil even though the oil price seems to reach a peak of its own. At current oil prices the domino effect of rising cost of living and commodities is affecting our day to day life. Although living in an oil producing country we are some what saved by the fact that the governments in such countries subsidizes lot of commodities including oil by the profit offset earned from selling oil at higher price world wide. Does it mean we become blind to the facts and future? No, the fact remains that with excessive exploitation of any natural resource we are bound to face shortages in future. This is a nature’s way of dealing with any natural phenomenon.

[Graph c] Oil depletion scenarios

What can be done, what will be done and how it will be done, will actually help in not eliminating the depletion but help in conquering that peak. The OPEC and other oil companies have already warned that pressure is mounting to pump more oil at current resources and especially the demand. With emerging economies like India and China, and their billion plus population the hunger for more oil is simply crawling upwards, if not peaking. Companies like Chevron have already started educating people with ‘Will You Join Us?’ initiative. Even these companies are accepting the social responsibility of demand – supply – conservation of natural fuel resources.

Major oil economies, companies and research labs have already embarked upon alternative sources of fuel. Some of these are:

• ethanol
• bio-diesel
• tar sands
• oil shale
• coal liquefaction
• gasification
• renewable energy sources (solar, wind, hydro, tidal, geothermal, wave, ocean thermal)
• nuclear energy (fission or fusion)

The major difference in viewpoints on Peak Oil comes from the fact that this theory is based on statistics and not on scientific equations and formulas. Where as looking at the R&D in the oil industry, it would be wrong to negate their forecasts of oil reserves too. So as consumers of oil who do we believe? Well if you think of oil companies as profiteers only, I would say look again, and talk to them. The people who work in oil sector are from amongst us and they too are affected by day to day changes in the economy. Countries that are the largest producers of oil have their entire economies relying on oil. They are working towards the promise of long lasting supplies of the precious natural fuel resources by conserving and exploring available oil resources, and educating the general population on sensible use of commodities that require oil & its derivatives. The change is happening.

But by far the most important factor that will affect all this is, me, you, and us. Yes us the People. Taking a leaf from Sir Edmund Hillary, we sure have to conquer ourselves, our habits, our lifestyle, our consumption of commodities, because at the end of the day oil giants are not fuelling their profit margins but our demands. Let us resolve to not being Fuelish.