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False Summit

We were wrong about peak oil: there’s enough in the ground to deep-fry the planet.

by George Monbiot: journalist, author, academic and environmental and political activist, United Kingdom.

The facts have changed, now we must change too. For the past ten years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. We had some strong reasons for doing so: production had slowed, the price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.

Some of us made vague predictions, others were more specific. In all cases we were wrong. In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995(1). In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010(2). In 2003 the geophysicist Kenneth Deffeyes said he was “99 per cent confident” that peak oil would occur in 2004(3). In 2004, the Texas tycoon T. Boone Pickens predicted that “never again will we pump more than 82 million barrels” per day of liquid fuels(4). (Average daily supply in May 2012 was 91 million(5)). In 2005, the investment banker Matthew Simmons maintained that “Saudi Arabia … cannot materially grow its oil production.”(6) (Since then its output has risen from 9 million barrels a day to 10, and it has another 1.5 million in spare capacity(7,8)).

Peak oil hasn’t happened, and it’s unlikely to happen for a very long time. A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun(9). The constraints on oil supply over the past ten years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s.” The investments required to make this boom happen depend on a long-term price of $70 a barrel. The current cost of Brent crude is $95(10). Money is now flooding into new oil: a trillion dollars was spent over the past two years, a record $600bn is lined up for 2012(11).

The country in which production is likely to rise furthest is Iraq, into which multinational companies are now sinking their money, and their claws. The bigger surprise is that the other great boom is likely to happen in the US. Hubbert’s Peak, the famous bell-shaped graph depicting the rise and fall of US oil, is set to become Hubbert’s Rollercoaster.

Investment there will concentrate on unconventional oil, especially shale oil (which, confusingly, is not the same as oil shale). Shale oil is high-quality crude trapped in rocks through which it doesn’t flow naturally. There are, we now know, monstrous deposits in the United States: one estimate suggests that the Bakken shales in North Dakota contain almost as much oil as Saudi Arabia (though less of it is extractable)(12). And this is one of 20 such formations in the US. Extracting shale oil requires horizontal drilling and fracking: a combination of high prices and technological refinements has made them economically viable. Already production in North Dakota has risen from 100,000 barrels a day in 2005 to 550,000 this January (13).

So this is where we are. The automatic correction – resource depletion destroying the machine that was driving it – that many environmentalists foresaw is not going to happen. The problem we face is not that there is too little oil, but that there is too much.

We have confused threats to the living planet with threats to industrial civilisation. They are not, in the first instance, the same thing. Industry and consumer capitalism, powered by abundant oil supplies, are more resilient than many of the natural systems they threaten. The great profusion of life in the past – fossilised in the form of flammable carbon – now jeopardises the great profusion of life in the present.

There is enough oil in the ground to deepfry the lot of us, and no obvious means by which we might prevail upon governments and industry to leave it in the ground. Twenty years of efforts to prevent climate breakdown through moral persuasion have failed, with the collapse of the multilateral process at Rio de Janeiro last month. The world’s most powerful nation is once again becoming an oil state, and if the political transformation of its northern neighbour is anything to go by(14,15), the results will not be pretty.

Humanity seems to be like the girl in Guillermo del Toro’s masterpiece Pan’s Labyrinth: she knows that if she eats the exquisite feast laid out in front of her, she too will be consumed, but she cannot help herself. I don’t like raising problems when I cannot see a solution. But right now I’m not sure how I can look my children in the eyes.


  2. Colin J. Campbell, 1997. The Coming Oil Crisis. Multi-Science Publishing Co. Ltd, Brentwood, Essex.
  3. Quoted by Bob Holmes and Nicola Jones, 2nd August 2003. Brace yourself for the end of cheap oil. New Scientist, vol 179, issue 2406.
  4. T. Boone Pickens, 9th August 2004. On the Kudlow and Cramer Show, MSNBC.
  5. International Energy Agency, 13th June 2012. Oil Market Report.
  6. Matthew Simmons, 2005. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Wiley.
  8. See the note at the bottom of pages 4-5, Leonardo Maugeri, June 2012. Oil: The Next Revolution. The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World.
  9. Leonardo Maugeri, June 2012. Oil: The Next Revolution. The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World.
  11. Barclays’ Upstream Spending Review, 2012, cited by Leonardo Maugeri, as above.
  12. Maugeri writes (page 47): “In 2011, Continental has estimated the Bakken OOP alone at 500 billion barrels. In terms of oil in place (not all of which is recoverable), both the Price and the Continental estimates would put the Bakken formation ahead of the largest oil basins in the world, making it the biggest one—a sort of Saudi Arabia within the United States. (In 2005, Saudi Oil Minister Al Naimi publicly estimated the OOP of Saudi Arabia to be around 700 billion barrels).”
  14. Andrew Nikiforuk, 26th June 2012. Canada’s Hard Turn Right.
  16. George Monbiot, 1st December 2009. The Urgent Threat to World Peace is … Canada.


  1. Multinationals with a bountiful supply of earth-destroying fuel… that’s really dis-heartening.

    But, fellow Earth-lovers, is there a positive to be drawn from this??

    Maybe, just maybe, we can see this as a second chance. Many times I’v thought how much better it would’v been if, once the industrial revolution had happened, we had put all that new found energy and manufacturing capacity into creating a sustainable society with a sound level of technology founded on ecological principles, rather than an economics based, infinite profit-growth motivated, consumptive hive-society.

    Hindsight is a wonderful thing. I’m sure our grand grandfathers had very little clue as to the problems they were creating to pass on to us.

    We, however, do not have the excuse of ignorance.

    So how about putting a generations worth of oil energy into the technology and infrastructure (both mechanical and biological) capable of weaning us off of dirty fuel forever?
    How about tidal generators along every coast, wind farms on every peak, bio-fuel generators to recycle the waste of every city? Better still let’s substitute dense population centres that can’t be supported by their land base with an intricate web of intimate communities founded on permaculture and other ecologically sane practices, (ee the ‘Master Plan’ if you haven’t already). Let’s plant forests where they once were felled and re-green the urban desert and (the other side of the same coin) the moral desert of human hearts!

    Let’s make the most of what we have to use, and the extra time that, Earth-allowing, we have to use it. Let’s make sure that we can indeed look our children in the eye when, in years to come, they ask us “what were you doing when this planet was in turmoil and Humanity on the edge of self-destruction?”

    With determination!

  2. Read this last night in the Guardian. I don’t see anything “new” here. “Easy” oil is near peak, or already has. As long as the price per barrel remains high enough (depending on who you read, $70-100, which is quite a range), these “new” sources of oil will remain commercially viable.

    There will still be a time when fossil oil production peaks due to its finite nature.

  3. Hi George, my understanding of the peak oil phenomenon was not that there will be less oil, or the oil production would actually decline, but that it would simply be less cost effective in terms of energy returned on energy invested (ERoEI) to get it out of the ground. When the ERoEI ratio is 3:1, that is, it takes the energy returned from one barrel of oil to get three barrels worth out of the ground, it’s supposedly no longer an economically viable exercise, I don’t pretend to understand the economics there though, and as common sense tells us, when the ERoEI hits 1:1 there is no net gain for the activity.

    Of course we can keep on increasing production if we keep throwing more money and energy at oil extraction, I thought the idea is that it’s ‘cheap oil’ that has peaked, and there’s plenty left in the ground, but it’s more expensive to get to. If it costs more to get it out, the products made from it get more expensive, and after a certain point, it’s not worth trying to get to it.

    Now, to be fair, the ERoEI hinges on the efficiency of our current technology, and a more efficient technology would raise the ERoEI, but putting blind faith in ‘technology as saviour’ hints a little too much of religiosity for my liking when we’re talking about science. I guess unless we have some breakthrough, the current efficiency figures are what we have to work with.

    This is how I understand it all, so I’m not sure I really comprehend your main thesis. Are you able to further explain it? Thanks

  4. As you well point out, one of the dire consequences of peak oil is the rising biofuels industry. I guess, that could change now that the economics, resource base and technologies have changed.

    One of the “good” things about peak oil, was the push it gave to the industry of electric transports (cars, bikes, etc), and the awareness it brought to many of the need for change.

    Pushing our civilization´s armageddon down the road a little bit farther may ironically accelerate a planetary armageddon, yes.
    And yes, we may deepfry, but at least we have a little bit more time to shake some heads, disrupt the system and create alternatives with the extra energy in our hands.

  5. There will no doubt be a host of dubious people using these newer stats as a way to debunk the need for sustainable community development. In my humble opinion, the case for permaculture design is unwisely hinged on shifting sciences and economics of energy extraction and climate change. Not that those things aren’t important, as they obviously are, but being human in an often difficult to understand world could be reason enough to dedicate ones energy to developing a more sane, just, and ecologically integrated version of civilization. Whether peak oil is in the past or the future, the systems permaculturists develop still make a whole lot of sense.

  6. Angelo – you’re absolutely right. I think George’s point is more about society, instead of pausing and taking stock of the situation, instead persevering at ever-increasing cost (in every sense of the word ‘cost’).

    George doesn’t mention any significant new finds. The sources he mentions have all been known for years. We’ve known for years that Iraq is sitting on huge reserves. We’ve also known about shale oil, tar sands, coal-to-liquids technologies, and fracking, etc., for years also.

    I’ve tried to elaborate a little on what I think George is saying here (and Jason, I think the logical conclusion to both George and my articles is the needed shift to sustainable community development – indeed, it’s more urgent than ever).

  7. A great article! Thanks.

    One must always be skeptical about concensous “truths”, as history shows the majority tend to get it wrong. As Oscar Wilde said, “To disagree with three-fourths of the public is one of the first requisites of sanity”.

    That said, long term the price of oil will certainly still go up before it’s again “cheap”. It can take years to bring new supplies to market – with or without public opposition. All it takes is for Europe or China to crash, demand temporarily plummets, investors bail out of the oil sector and new discoveries are put on hold, markets stabilize, demand picks up, investing in oil production becomes profitable again until the X year gap before new supplies become available….

    A study of the Kondratiev Wave demonstrates this clearly.

    But what K-wave doesn’t address is the destruction of natural resources in this process and unsustainability of the current system…

  8. Thanks Craig, after reading your article I can understand the context of George’s article. I think your article highlighted quite clearly that the shift to sustainable community development is more important than ever, and that a drastic paradigm shift is required from short term solutions (with enormous hidden long term expense) to long term solutions that may not be the cheapest short term options, but will save more than money, and our civilisation in the end.

  9. No matter how much we have underestimated the amount of oil we are able to extract it still doesn’t resolve the problem that we will eventually run out of oil. These new technologies have allowed us to kick the can down the road a little longer, but eventually we will face the far side of Hubbards curve. Peak oil is not a myth – It may prove hard to predict with certainty, but it will eventually happen. The author (Leonardo Maugeri) seems to suggest that we shouldn’t have been so modest/naiive in the past when we assumed we only had x amount of accessible oil. Although he doesn’t directly say so, he seems to suggest that we would be better off operating as if we will never run out of oil because we will forever be able to extract more of it. The only case in which this is true is if the easy oil lasts until we render the earth uninhabitable to human life.
    Is it correct to assume that further advances in technology will occur? Fracking and horizontal drilling may have allowed us to access more oil, but the author assumes that these technologies will continue to advance in a way that allows us further and further extraction of resources which are now believed to be too expensive or inaccessible. Eventually EROI comes around to bite you and the question of whether you CAN extract the oil becomes irrelevant.
    It is important to note that all of this hubub could turn out to be the next economic bubble. There are a lot of people out there with a lot of money looking for places to invest it. Language insisting that the US will be the “New Saudi Arabia” will no doubt sucker in lots of cash. This will probably lead to a glut on the market and drive down the price to the point where it doesn’t make much sense to build or operate these expensive wells. This process will no doubt lead to cycles of boom and bust – in the paper the author assumes this problem will magically disappear by 2015. He seems to assume that even though “the age of cheap oil is over” we will settle at a slightly more expensive oil that is still relatively cheap and that this price will be more or less constant, for the foreseeable future. His faith in technology to solve all of our problems is laughable – “the difficult oil of today will be the easy oil of tomorrow” – are you serious?
    He also insists that our economy will become less dependent on oil for growth because of efficiencies and decreased consumption. He also assumes that population growth will magically reign itself in. He suggests that these factors will lead to only 1% of growth per year. 1% may sound small, but that is still means that in 72 years we will be using twice the oil we are using today. To assume that this is possible is completely ridiculous.
    Bottom line, this report is a short sighted, techno-optimistic fantasy that will no doubt help to inflate the fracking bubble even further, most likely making the author and his cronies millions while the rest of us suffer the consequences. We should quit listening to people like this as it is quite obvious in reading the paper that he is desperately trying to hang on the the idea that we will have cheap energy forever.

  10. Hi Angelo,

    thanks for your comment. The EROEI of the Canadian tar sands operations is 3:1. It hasn’t stopped them, and it hasn’t made it unprofitable. They are using cheap energy to produce expensive energy, and they’re making a fortune. I’ve come to see EROEI as a red herring (unless it gets to 1:1!). If there’s money to be made, investment will happen, regardless of the environmental damage done, unless it can be stopped by political action.

    Best wishes, George

  11. I think some are missing the point here – thinking that peak oil concerns are somehow now negated. The point is that peak oil is very real, and despite that, economic mechanisms are doing their utmost to persevere with BAU, no matter the cost. Most people will suffer as a result, but a few people will continue to consolidate money and power, as they use government subsidies (taxpayer dollars) to make extraction of ever-uglier energy somewhat viable, and the non-sensical economy we’ve yet failed to replace with something based on reality can continue a little longer, limping along on expensive energy until there’s nothing left.

  12. “Energy has always been the main driver of societies, but for the last 30 years we were unable to pay for the energy supply we wanted on a real time basis, so we issued more money-as-debt to pay for it. So, the amount of financial claims that people think they own in aggregate now, is much larger than the ability of our productive infrastructure and natural resources to pay it back. So, even though our economic problems originated from the impact of harder and harder to extract and thus more expensive energy, the story now is the enormous amount of financial obligations in the developed and developing world. This dominates the energy story. For example, if interest rates go up everywhere 100 basis points, or from 1% to 2%, or 4% to 5%, the impact on the world economy would be the same as if oil prices rise from 100 dollars to 200 dollars per barrel. In other words, right now, we have built up such a huge financial balloon, that the risks from that popping and the likelihood that aggregate demand is going to decline will for the foreseeable future be even more severe than a 3 or 4, or 5% natural decline rate in oil. And of course once this happens, and commodity prices drop, a significant amount of what we have labeled as oil ‘reserves’ will disappear as prices go below marginal cost. It has never been about how much oil there is, only about the profits left over to society after extraction costs.” – Nathan Hagens


    When eternal growth shows not to be so eternal any more there will not be enough capital to extract these low EROEIs. Credit shrinkage = energy shrinkage.

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