M. King Hubbert was a smart geologist with canny ideas about oil that no one listened to at the time. Can a fascinatingly flawed book rescue his legacy?
THIS is a curious time to publish a biography of M. King Hubbert. The story of how this brilliant but irascible Shell geologist accurately forecast in 1956 that US oil production would peak and go into terminal decline by 1970 is by now well worn.
Worse, after the supply crunch of 2008 that sent the price soaring to $147 per barrel and was widely mistaken for the global peak, the world is now swimming in oil once more, and the price languishes at around $50.
In The Oracle of Oil, Mason Inman seeks to rehabilitate Hubbert, yet he struggles to make a convincing case. The book is nonetheless well written, deeply researched and rich in anecdote – Hubbert’s character and his intellectual achievements sing out.
Born to poor Methodists in hardscrabble Texas hill country, Hubbert sold his cow to go to college, was driven to science by his atheism, and later made donations to Martin Luther King. He achieved many breakthroughs with little more than a fierce intellect and a blackboard.
In 1953, he was the first to figure out how fracking worked, showing that the fractures caused by injecting fluid into rock would spread vertically not horizontally as industry experts then believed. Initially, they ignored him, convinced only after experiments involving a goldfish bowl, a soda bottle and a turkey baster.
You couldn’t accuse this account of being pacy, though. It’s a good 100 pages before we come to Hubbert’s defining achievement: a revolutionary way of forecasting that introduced us to the idea that the rate of oil production would peak and start to fall long before reserves were exhausted, often as early as halfway through. On a graph this produced a roughly symmetrical bell curve with a central peak – hence the name.
Hubbert’s forecast pitched him into a running battle with many in the oil industry until he was eventually proved excruciatingly right during the oil crisis of 1973, and achieved “oracle” status while Jimmy Carter was president.
Inman plots Hubbert’s work and short-lived impact on US energy policy, until the geologist’s death in 1989, but his uncritical approach relegates any attempt to find current relevance for Hubbert to a 20-page epilogue. Even here, the author seems too much in love with his subject to confront the toughest conclusion raised by his own material – that Hubbert’s work may no longer matter.
At the start of this century, talk of peak oil flooded the energy debate. Surging demand in China, the invasion of Iraq and the upward march of the oil price suggested an impending crunch. This seemed to have arrived between 2005 and 2009, when global production stayed flat at between 82 and 83 million barrels per day (mb/d), sending the price spiralling to $147 per barrel – up 15-fold on the previous decade.
Many thought we had reached the limits of oil production and the global peak was nigh. But production started to grow again, and by 2014 had reached almost 89 mb/d, causing the price to slump from what appeared to be the new normal of around $115 to less than $30 by the start of 2016.
The irony is that peak oil of a sort did arrive in 2006, and Hubbert hit the bullseye, though Inman makes surprisingly little of this. In 1956, Hubbert forecast that global production of crude oil – oil found in pressurised reservoirs that flows freely up when wells are first installed – would peak “within about half a century”.
“In his lifetime, the oracle’s forecasts were always ignored or dismissed until it was too late“
Exactly 50 years later, crude oil production peaked at 70 mb/d, and because it then made up the bulk of oil supply, this caused the temporary plateau of global oil production that helped pitch the global economy into recession. Now the former naysayers, from the International Energy Agency to most major oil companies, admit that conventional crude production has indeed peaked. Hubbert’s forecast, made a lifetime before, again proved to be spectacularly accurate.
But then again, so what? Total oil production, including “unconventional” sources such as tar sands and shale oil, soon started to grow again. Of the 6 mb/d increase in global oil production between 2006 and 2014, almost a fifth came from the Canadian tar sands, and the rest from the US “shale oil revolution” driven by fracking. Inman misses another huge irony here: Hubbert’s forecast for the peak of global crude oil was bang on, but its full impact was deferred by the very production technique he had helped develop 60 years earlier.
Many economists would argue that this exposes the blind spot of Hubbert’s approach – it didn’t take into account the potential of technology to expand the oil resource we can extract. That has been demonstrated, but if tar sands and shale oil are what’s left, it may not give us much of a breather.
There is no knowing the future trajectory of tar sands output now that its production capital, Fort McMurray in Canada, has been devastated by wildfire after unusually dry weather some blamed on global warming. As Inman points out, in the US shale patch, fracking wells suffer vertiginous decline rates of up to 50 per cent in the first year; the sweet spots have been tapped already; and the industry is massively in debt and failed to cover its costs even at $100 per barrel. He might have added that even the International Energy Agency expects US shale production to peak in 2020.
But this is almost beside the point. Hubbert’s legacy will not be determined by a forensic scrutiny of his life or of the short-term outlook for US shale, but by what happens after shale peaks. If non-conventional production continues to meet growing global demand, Hubbert will fade into footnote. So too if demand for oil starts to fall sooner than supply, through improvements in efficiency and the electrification of vehicles. The chances of this have improved with the Paris climate agreement, as even Saudi Arabia seems to accept, having announced a $2 trillion fund to wean its economy off oil by 2030.
If, however, nothing turns up to replace shale, technologies fail to curb oil demand, and supply constraints finally bite, Hubbert may yet be proved broadly right. But his influence will probably still be negligible: as Inman makes depressingly clear, the oracle’s forecasts were always ignored or dismissed until it was too late.
This article appeared in print under the headline “The peak oilman”