Something prophesied for decades may be happening now: Peak Oil. As with so many things, though, it is not happening in the way many experts thought. Whether it is occurring and what it means to consumers has varied possibilities. Consumers may feel long-term implications in their daily living.

“Peak Oil is the point in time when the maximum rate of crude oil extraction is reached, after which the rate of extraction is expected to begin to decline… forever.” (Source)

The debate is how it may happen. Recent energy scenarios from oil giant BP recently generated debate. From BP: “The scenarios all see oil demand fall over the next 30 years.” Anywhere from 10 percent on the low side to 80 percent on the high side. “Demand ‎plateaus in the early 2020s … oil demand never fully recovers ‎from the fall caused by Covid-19.” (Source)

That is the surprise to many people: Peak oil catalyzed because of the virus. Not just environmentalists. Not policymakers. Not just technology. A virus-induced slowdown reduced the use of oil. Maybe forever some speculate.

In the past the oil producers didn’t hold the line. Now – “Oil-producing nations have shown remarkable discipline so far in making sure the global supply will be somewhat predictable. Demand, however, is proving much more elusive,” said the Wall Street Journal, Friday, September 17.

Want evidence of change in the petroleum business? Follow the money. ExxonMobil was dropped recently from the Dow Jones Industrial Average after 92 years in the index. One of the companies put into the index that day was tech sweetheart Honeywell, which includes in its business energy efficient products and solutions. That is telling.

“Is this time different? Yes,” said Lawrence Sullivan, a petroleum consultant. “The virus was a ‘black swan’ as financial types say, and it could be a catalyst for new models.”

Sullivan teaches Regional Geography and highlighted oil in his class work. He said, “I put up Hubbert’s Peak Oil slide and the students are keen to understand, ‘When do we run out?’ That really depends on the developing world.” (Explanation of the curve at the end of the blog.)

Exhausting the supply of oil, or maybe any raw material, does not really happen. Sullivan said, “Resource economists use this for any ‘finite material’ today – we will run out in 20 years. But if a new technology comes along to find more and produce more then we run out in 40 years. Then, if a new technology comes along, and it is 60 years…” Technology and price matter in the market.

Said Sullivan, “The apt expression is from the Saudi minister, Yamani, who said, ‘The stone age did not end because we ran out of stones.’”

The supply facet of oil haunted society for so long – what if we ran out or couldn’t get it? “Peak Oil used to be defined by supply. This is the first time it’s been determined by demand,” said a geo-scientist I asked recently. He was one of the people who helped define North Slope oil. He knows oil.

Will oil exploration continue after Peak Oil?  “Undoubtedly,” he says, “But it will be increasingly difficult for reasons of geologic complexity, and more importantly, global politics, and be driven by demand – the ability to extract, transport and refine into products that have market value. In the US, environmental and other pressures will drive these activities overseas to less-developed nations eager for cash and jobs.”

So what does it mean for consumers, people like you reading this blog?

Transportation: “The real inflection point for gasoline is the end of this decade,” one energy analyst said recently. Maybe that means there is time to wait to buy an electric vehicle. Gasoline will be around. After all, there is a charging network that still needs to be built and innovations in batteries to come.

On the other hand, maybe dealers need to move those electric cars. The old axiom to save money is to “buy straw hats in the winter,” or in this case, maybe buy an EV when gasoline is cheap.

Will your corner gasoline station close? Doubtful. It will evolve, though. Where you “fill up” could change if you go electric. Shopping centers and restaurants may offer car chargers. Maybe charge while you watch a movie, or visit the dog park.

Home heating: The lack of pipeline infrastructure can create its own market forces. Duke Energy canceled its Atlantic Coast Pipeline in Virginia and North Carolina. Phillips 66 canceled pipelines in the mid-continent. Plains All American and Kinder Morgan have pipeline plans that may be changing.

Never mind that some industries need natural gas as a fuel to manufacture. As plants may struggle to get fuel, or pay more for that fuel, consumers will feel the impact.

Add to this the movement in some cities to disallow natural gas use in homes. Together these could have a supply and demand book-end effect. Residential customers will not have to worry about choosing a natural gas furnace or stove because a politician said you can’t have it.

Peak plastic: Every day and in ways you probably don’t even think about, you use plastic. You may have brought home your lunch in plastic. Your car has loads of plastic inside. The mouse for your laptop – plastic. Your flu shot had a plastic syringe. …just a few examples.

One report, The Future’s Not in Plastics, says pressure to curtail the use of plastics could slash virgin plastic demand growth from 4% a year to under 1%, with demand peaking in 2027. That means plastic from raw feed stocks.

Hydrocarbons – petroleum and gas – are base materials for plastics and many other things. That means that the peak oil demand impact can amplify when the plastics growth driver is gone. (Source, image left)

Plastics will still be used but their manufacture will change. Look to recycling. “Plastics demand is likely to peak as the world starts to transition from a linear plastic system to a circular one and governments act to hit climate targets.” (Source)

Your utility: Try on this headline – Big Oil Goes Looking for a Career Change. I’ve written about the skills that can be shared between utility companies and petroleum companies. Good engineering skills, project management, analytical skills – all are part of any good energy firm. So, the question in the future is whether companies may morph business models. Will people buy BP or Chevron electricity?

Peak oil has big impacts, though they might not happen for a while, and they might not play out as some may think. The ground has started to shift, though. “The arrival of the coronavirus is rattling a global oil market that was already facing challenges. On the demand side, growth in 2019 was significantly weaker than expected … Refining capacity additions in recent years have outstripped demand growth, bringing tough competition for an industry already challenged by tightening product specifications.” (Source)

The oil roller coaster is topping out, and this time may not have another lift hill to climb. There will be twists and turns. Hold on for the ride.


Hubbert’s Peak or Hubbert’s Curve is a model that approximates the production rate of a resource over a period of time. Specifically, Hubbert’s Peak refers to the point at which this production rate is at its highest with demand for the resource rising, and after this it predicts a drop in correlation to the increased demand. During this drop, there may be dramatic differences in production and demand as demand continues to increase but production drops overall. The figure (above) shows Hubbert’s predicted model compared to US oil production. Although this model can be applied to many resources, it was initially developed as a model for oil production.

Another explanation:

Hubbert’s Peak Theory is the idea that, because oil production is a non-renewable resource, global crude oil production will eventually peak and then go into terminal decline following a roughly bell-shaped curve. Although this model can be applied to many resources, it was developed specifically as a model for oil production. Key takeaways:

  • Hubbert’s Peak Theory predicts the rise, peak, and decline of fossil fuel production.
  • With revolutions in new technology, it will be longer than originally predicted before the reserves run out.
  • In the long run, fossil fuel resources are finite, so Hubbert’s Peak Theory applies, but it does not appear to be a threat in the near term.


Feature image is an oil rig at Eagle Ford, South Texas (ConocoPhillips image library)