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from the edges. If at any time any peanut butter gets left behind, say in a small pocket behind the front formed by your hands, it will be lost, stranded forever by geological circumstance and/or economics. This would be no small challenge, and you’d probably be quite cautious as you worked around the edges, carefully avoiding leaving any behind. Likewise, it’s no small challenge for oil producers to maximize the production from oil fields, which are often enormously complicated in their underground topography (imagine that you had to work around random baffles and blind cavities in the inflatable mattress), and they must work carefully and diligently to get as much out of the ground as they can. Given these realities, it can take anywhere from a few years to several decades for any given field to finally achieve maximum production.

In the United States, oil discoveries peaked in 1930 and production peaked in 1970, which yields a gap between a peak in discovery and a peak in production of almost exactly 40 years. Perhaps that 40-year gap was unique to the United State’s particular geology and the oil demand of the times, but the United States is a very large country, and we might reasonably consider this experience to be a plausible proxy for the entire world.

This is where the story gets interesting. Figure 16.4 shows that worldwide oil discoveries increased in every decade up to the 1960s, but have decreased in every decade since then, with future projections (2010 through 2030) looking even grimmer.

Figure 16.4 Global Oil Discoveries Peaked in 1964

Because discoveries necessarily precede production, a time lag exists between discovery and maximum production.

Source: Association for the Discovery of Peak Oil and Gas (ASPO).

If you’ve got to find it before you can pump it, and it takes time to develop fields to achieve maximum production, and the global peak in discoveries was in 1964, then we know there’s a peak in production coming at some point. The United States’ experience of a 40-year gap between its discovery and production peaks suggest that perhaps 40 years is as good a starting point as any to begin looking for a world production peak. (1964 plus 40 equals 2004.)

A Global Peak

Now let’s turn our attention to global oil production. In the prior section we made the case that a peak in discovery would lead to a peak in production. That’s simple logic. In July of 2008, oil hit an all-time high of $147 per barrel, and there are a couple of tantalizing clues to be found in the run-up to that event.

Figure 16.5 shows only global conventional crude oil production over the period from 1990 to 2009—it leaves out biofuels and other liquids that collectively amount to roughly 10 million barrels a day.

Figure 16.5 Yearly World Crude Oil Production

Crude oil production was essentially flat between 2004 and 2008, with 2005 being the technical peak.

Source: Energy Information Administration.

What we see in Figure 16.5 is that oil has been bumping along a plateau that began in 2004, exactly 40 years after the world peak in oil discoveries. Sound familiar? One fascinating clue here is that even as conventional crude production was flat between the years 2004 and 2008, prices spiked from $50 a barrel to $147 a barrel. If there ever was a strong incentive to get oil out of the ground and off to market, a near tripling of the price of oil would be it. Yet oil production did not rise in response to these market signals. Why not? Could it be that oil production was already at its limits? A second fascinating clue, besides the eye-popping coincidence of the 40-year lag between discoveries and an apparent production peak, is the shape of the bumpy plateau, which mirrors the production peaks seen for such large producing areas as the United States and the United Kingdom. The bumpy plateau is made up of old fields going into decline, new enhanced oil-recovery techniques being applied and new fields coming on line. Add them all together and you get a bumpy plateau.

If we’re already at peak, as