Dr. Kenneth S. Deffeyes, oil worker turned Princeton professor, wrote a book about peak oil, called
Hubbert's Peak. In the
first chapter, he talks about how he knew peak oil had arrived for the U.S.:
Hubbert's prediction was fully confirmed in the spring of 1971. The announcement was made publicly, but it was almost an encoded message. The San Francisco Chronicle contained this one-sentence item: "The Texas Railroad Commission announced a 100 percent allowable for next month." I went home and said, "Old Hubbert was right." It still strikes me as odd that understanding the newspaper item required knowing that the Texas Railroad Commission, many years earlier, had been assigned the task of matching oil production to demand. In essence, it was a government-sanctioned cartel. Texas oil production so dominated the industry that regulating each Texas oil well to a percentage of its capacity was enough to maintain oil prices. The Organization of Petroleum Exporting Countries (OPEC) was modeled after the Texas Railroad Commission. Just substitute Saudi Arabia for Texas.
Now the Saudis have made a similar announcment.
On Friday, this
WSJ item hit the newswires:
Ali Naimi, Saudi Arabia's oil minister, also said the kingdom had tossed aside its production cap set by the Organization of Petroleum Exporting Countries and is willing to sell its customers every barrel of oil they want, up to its current capacity of 11 million barrels a day.
Peak oil for world production is here.
But don't expect panic in the streets or anything. It wasn't like that when U.S. production peaked:
With Texas, and every other state, producing at full capacity from 1971 onward, the United States had no way to increase production in an emergency. During the first Middle East oil crisis in 1967, it was possible to open up the valves in Ward and Winkler Counties in west Texas and partially make up for lost imports. Since 1971, we have been dependent on OPEC.
Few realized the importance of that little news item in 1971. The impact of the U.S. peak was not felt until 1973 - the Arab oil embargo. Similarly, I don't expect the impact of the Saudi statement to be clear until some other emergency drives the impact home, possibly years from now. But make no mistake - peak oil is now.