The idea that oil reserves are finite was broached by U.S. geologist M. King Hubbert, who in 1956 theorized that oil production peaks before falling sharply as the amount of oil in a particular field declines.
Industry experts building on Hubbert's work predict that global oil production will begin to fall by three or four percent within a few decades. One of them is journalist David Strahan, a trustee for the London-based Oil Depletion Analysis Center, a non-profit organization that raises awareness about the issue.
"Peak oil is not about running out of the last barrel of oil on the planet. 'Peak oil' is so-called because the expected profile of global oil production on a graph looks like a fairly symmetrical mountain, so therefore it has a peak in the middle. But what it really means is that we are accustomed at the moment for oil production to keep on growing every year, but that growth will hit a peak and then go into decline so that, in the coming years, we are going to have a steadily shrinking oil supply," says Strahan. "It's almost certain that peak oil will happen before 2020. There are people who believe it's happening right now. I am not sure about that, but I cannot see any set of circumstances in which the world does not hit peak oil before 2020."
Some analysts accuse oil-producing countries of keeping supplies tight despite rising demand to maximize their profits as record prices surge past $100 per barrel. Others say a weaker U.S. dollar against other currencies has contributed to the price surge, particularly in the United States. Kenneth Medlock, an economist and energy expert at Rice University in Texas, says that, and supply and demand, are shaping today's oil market.
"Production and consumption are basically the same because the market has to balance. But global crude oil production, the last number I saw was on the order of 84-and-a-half-million barrels a day. In the past decade, demand has risen faster than it has at any point in time in the previous 30, 40 years," says Medlock. "So it's been rising very rapidly and supply was rising with it. But in the past three years, when we've seen this very rapid run-up in prices, we've also seen supply not continue to increase. And so basically what's been happening is the pressure is there for demand to continue to rise, but because the supply is ever more difficult to get to, we've seen the price go up with it."
Some analysts maintain that after large oil fields are explored, it becomes harder and more expensive to drill deeper for increasingly smaller amounts of oil. But chemical and bio-molecular engineer Michael Economides of the University of Houston says oil will not run out anytime soon.
"The first time that people said we were running out of oil was in 1866, four years after the first purposeful well was drilled in Pennsylvania. The whole concept that we are running out of oil has been repeated on at least six major occasions in the last 150-some years. Peak will happen," says Economides. "But my calculations suggest that peak oil may happen around 2040, perhaps 2050. And then after that, it will linger on for decades -- perhaps two, three centuries. We are still going to be producing commercial quantities of oil."
Economides says technology and new drilling techniques have extended the world's known oil reserves. As a result, many experts say estimates for oil reserves have been rising, with this year's global reserves estimated at one-and-a-third trillion barrels.
"The introduction of modern geo-sciences has probably added 20 percent [more oil] to the United States' reserves. Fifteen years ago, it was a good strike if we drilled ten wells and one well was good. Today, seven out of ten drilled wells are commercial successes. All of that is because of technology," says Economides. "We have gone below 10-thousand feet of water, which would have been unthinkable 15 years ago. So all of these things extend reserves and world production capacity."
Even if the world reaches a point when it can no longer extend the life of proven oil reserves, Economides says necessity will lead to the development of energy alternatives. Geologist Eric Cheney of the University of Washington in Seattle agrees. He says the global economy will cope with shortages before oil runs out.
"Science, technology and economics are going to provide more oil. And we're going to start manufacturing oil from non-conventional sources like the tar sands of Alberta [in Canada], possibly even the shale of the western United States. And with increased money, we can afford to produce oil that we could not pump out of the ground before," says Cheney.