Today: the Hubbert Peak
1. Who was Hubbert?
. . . Marion King Hubbert
(Oct. 5, 1903 – Oct. 11, 1989)
. . . Was a geologist at Shell
. . . Devised a way to predict
oil production for a given oil field
. . .and by extension for a given country
2. ...and what was his peak?
Oil field production rises,
then hits a limit,
then falls
Duh!
But why does it rise? Level off? Fall?
The qualitative observation is obvious
Quantifying it (to allow predictions) is trickier
3. Hubbert's prediction about the US
. . . in 1956 he predicted:
US oil production would peak in 1965-1970
. . . he was widely disbelieved
. . . but US production did peak in 1970
. . . sure we still pump the stuff
but less, year by year
4. Other countries and their Hubbert Peaks
. . . Each country has its own peak
. . . Most countries have peaked already!
. . . Some major oil-producting countries have not
. . . Iraq, Iran are among them
5. If fields and countries peak,
why not the whole world too?
Suppose one country's production is increasing . . .
can world production be decreasing?
. . . How is the world different
from any one country or oil field?
6. Why the world is a bit different
. . . price elasticity of oil:
Δ demand/Δ price
What is "Δ"?
Suppose demand goes up 20%,
but price barely budges
Is the price very elastic
or not very elastic?
Suppose demand goes up 10%,
but price jumps to $4/gallon?
Is the price very elastic
or not very elastic?
or not very elastic?
So are oil prices elastic or not?
7. How sensitive are oil prices
to changes in production?
. . . for a field?
. . . for a country?
. . . for the world?
8. Ok, so...
How sensitive is production
to changes in price?
. . . how might
the world peak of production
differ from
a countries peak of production?
9. Example: pre-recession gas prices
When will the peak be?
. . . http://www.hubbertpeak.com/images/peakoilproduction2008.png
or, better, just
http://www.hubbertpeak.com/
. . . Inference:
as recession eases,
gas prices will skyrocket
... again
. . .Inference #2:
getting new wheels soon?
Avoid a gas guzzler...
. . . When will be a better time than now
to go for a power & performance oriented car?
Btw: Hubbert-style peaks apply to other resources
. . . renewable, non-renewable, or both?
