The concept of peak oil started as a geological theory* that went like this: if you knew the amount of oil produced in the past, the rate at which it was produced, and roughly how much oil remained under the earth’s surface, the theory could help you determine when oil production would likely start declining. Over the years however, proponents and critics alike recognized that more factors than just the size of oil resources and the ease of exploiting them would determine when world oil production would peak and plateau.

In the inimitable words of Frenchman Jean Marie Boudaire, “it ain’t the size of the tank [the resource], it’s the size of the tap.” And a veritable suite of factors can tweak “the size of the tap,” or how fast oil can be extracted or produced.


Wars impact production rates. Iraqi production is down because they’ve had bullets flying over their oilfields off and on for about 30 years. Nigerian rebel factions attack and take down oil production facilities with alarming frequency. Nationalism has converted most of the world’s oil reserves to state-controlled national oil companies that in many places produce oil inefficiently. International and domestic politics keep the efficient, well-funded, experienced international oil companies on the sidelines, away from many of the world’s best remaining oilfields. This plus rapid inflation in the cost of oil production equipment and operations has resulted in serious under-investment in projects to produce new oil in the four-years-and-beyond time frame. (The upside here: “inefficient production” will likely lower the ultimate world oil peak and lengthen the plateau production period, thereby giving us more time to plan an adaptive transition.)

It now looks as if a new factor has come into the game, one that could severely limit the rate at which new oil fields are developed over the coming years. This factor is the financial/liquidity crisis and the rapidly deteriorating world economic situation.