M. King Hubbert did more to raise awareness of the finite nature of global oil reserves than any other person, living or dead. He was a larger-than-life figure, who fought tirelessly to insert the limits of nature into the national dialog regarding the strategic use of resources. Yet surprisingly little has been publicly documented about the man, even though we are hurdling ever faster into a future shaped by the very limits he warned about.
In today's podcast, Chris talks with Mason Inman about his new book The Oracle Of Oil, the first in-depth biography of M. King Hubbert, to learn more about the genesis of the Peak Oil theory:
Hubbert was in a much higher position within the oil industry than I had realized. He was Head of Research at Shell Oil (NYSE:RDS.A) (NYSE:RDS.B) with the research for exploration and production of oil. At the time - this was in the 40s through the 60s when he was there - Shell's lab was the most advanced in the industry, so he was really a leader within the industry.
Also, it turned out there wasn't a job for trying to forecast the future of oil. Basically, nobody was really doing anything rigorous. It had been growing quickly and they just kind of assumed that this would continue. He was doing this on his own, going against the grain in the industry to try to make forecasts that were rigorous. When he came out with bad news where he was saying that it looks like the oil production in the US will peak around the late 60s or early 70s, this was not a message that the industry wanted to hear. He had to fight to try to get people to take it seriously even though he had this really important position within the industry(...)
He was very stubborn, which had some good sides to it and some bad sides to it. Even when people weren't listening to him, he still kept hammering away at these issues about that growth can't continue forever, that we'll run into limits with oil production and that the economy is often shaped by forces that aren't the best for common people necessarily. Even when people weren't listening, he still kept trying to get these messages across for decades because he believed that education and rational discussion was the best way to try to change society.
I really came to appreciate his persistence in his and it was remarkable how he never seemed to get bitter that it was difficult to get these messages across. Sometimes when other people did start to get attention for similar ideas, he wasn't bitter that they were getting a lot of attention rather than he was. For example, in the early 1970s, there's this report, The Limits to Growth that came out that got a lot of attention and in his talks Hubbert pointed out this was essentially what he had been talking about for years and the people who were behind The Limits to Growth report, these MIT researchers, they actually said that they got a lot of inspiration from Hubbert. I have a letter that I ran across in Hubbert's papers from Dennis Meadows, who was one of the leaders of The Limits to Growth report and he was suggesting a collaboration with Hubbert and it never came about, but it's kind of amazing to think about What if they had? (...)
It's important for people to realize that conventional oil production did peak a decade ago in 2006. Conventional oil makes up about 90% of the oil that we consume now and it's from the kind of fields where you drill a hole in the ground and oil comes out. The unconventional oil that we hear a lot more about - like from fracking, where you have to pump all this fluid in to create fractures in the rocks in order to get any oil out, or tar sands where you have to dig things up and cook them down in order to get oil out - those unconventional sources get a lot of attention because they're the marginal source that have a lot of influence on what the price of oil is. But, they actually make up a very small part of what we consume, so people have generated a lot of hype around fracking but it's a relatively small player in the overall oil market - though it can have a big influence on prices, as we've seen lately. Fracking is not the only reason why the price of oil has dropped lately. It's also because the world economy is not doing well and the growth forecasts keep getting revised downward, but it definitely played a role that oil production in the US was able to increase so rapidly. But that's tied up with a whole bunch of stuff like cheap credit being available to these companies so that they could boost production without really having to worry about the normal things that businesses worry about.
That's a big reason why we're not seeing the death of peak oil I think, because we've hit this limit with conventional oil production. Companies have had every reason to try to boost production of conventional oil if they could, and so far it seems like they haven't been able to. And now major forecasters like the International Energy Agency or Exxon Mobil (NYSE:XOM) or BP (NYSE:BP): they all say that conventional oil production isn't going to go any higher than it is now. But those forecasters have also generally been overly optimistic about how much conventional oil production there would be. They didn't foresee this peak coming so I'm inclined to think that their latest forecasts are probably also overly optimistic. If they're saying it's just going to be flat from here on for the next quarter century, that's probably too high. We're probably looking at a decline in conventional oil production coming.
I've definitely found a lot of reports from the military in the US and other countries that are raising concerns about peak oil or about limits to the oil that might be available to the military and the cost of that oil. They're definitely thinking about these issues.
Click the play button below to listen to Chris' interview with Mason Inman (38m:30s)