North Sea: huge investment in what was once cutting-edge technology

Whatever happened to peak oil?

Prices are down to a 10-year low. It is clear that dire predictions of exhausted reserves and the world running out of oil were thoroughly misconceived. Jack Conrad returns to the issue of energy

The basic proposition of peak-oil pundits appears simple and on the face of it unanswerable. The world is finite, the world’s natural resources - in this case oil - are equally finite. Therefore, so goes the argument, if we humans persist in extracting and burning the stuff on any sort of scale, sooner or later reserves will become exhausted. Long before that though, maximum output will be reached - peak oil - after which the rate of extraction is projected to rapidly decline, till, finally, the cost of obtaining an extra barrel exceeds what it can be sold for (in terms of physics, a negative ‘energy return on energy inputs’ or EROEI).

Over the years, peak-oil pundits have announced that production would begin to decline in 1975, 1985 … 2005, etc. Regardless of those repeated prediction failures, when the tipping point finally arrives, all manner of dire socio-economic consequences are supposed to follow: eg, massive hikes in consumer prices, an end to economic growth, oil wars, etc.1 Indeed because oil is still the world’s leading primary energy source - oil 32%, coal 27%, gas 22%, renewables 14%, nuclear 5%2 - and plays a vital role in air, sea and road transport, the manufacture of plastics, chemicals, etc, there are those who excitedly issue dire warnings of some kind of global collapse because of peak oil.3

Not surprisingly, peak-oil pundits have been challenged on both theoretical and empirical grounds. Some critics dismiss peak oil as economically illiterate.4 Others see a convenient excuse to assert direct US control over Middle East oil (a region which accounts for 34% of world oil production, 45% of crude oil exports and 48% of proven reserves).5 Then there are those who believe that peak oil is a gigantic financial scam. Rising spot prices certainly yield huge profits for Wall Street and City of London speculators.6

As an idea, peak oil has had an undoubted political impact. On the side of the angels, green parties, environmental NGOs and eco-crusaders have used the widespread fear of peak oil to bolster their case for energy efficiency measures, alternative sources of power generation, novel technologies and generous government subsidies (eagerly exploited by corrupt politicians and cynical capitalists alike). But there are the devils. Opec, the oil company majors, the nuclear industry, MBS, Vladimir Putin, the frackers and shale oil buccaneers, all have taken advantage of peak oil too.

Then there is Trump. He adheres to the doctrine of “energy dominance”.7According to the White House, “President Donald J Trump wants reliable and affordable energy to fuel historic economic growth.”8 That, plus massive arms sales, explains his unstinting support for Mohammed bin Salman. CIA reports blaming the Saudi crown prince for the foul murder of Jamal Khashoggi are therefore blithely brushed aside.

And, of course, in the name of ensuring America’s energy security, the 45th president issued executive orders giving the go-ahead for the construction of the Keystone XL pipeline, the shredding of federal restrictions on mining and drilling in national parklands, and reversing the ban on offshore drilling in the Atlantic and Arctic imposed by Barack Obama just before he left office.

As with the US withdrawal from the non-binding Paris climate accord, an arrogant display of contempt for the future of the planet ... but, note, in July 2018, the US became the world’s number-one crude oil producer (overtaking both Russia and Saudi Arabia).9 The International Energy Agency predicts that the US will rise to become the “undisputed” top producer of oil by the middle of the next decade - the growth of US production being “unprecedented, exceeding all historical records, even Saudi Arabia after the production from the mega Ghawar field or Soviet gas production from the super Siberian fields.”10

Trump wants to keep oil production high and oil prices low. Given his decision back in May to renege on the nuclear deal with Iran and reimpose sanctions, there were fears that prices were about to skyrocket - “to between $100 and $150” a barrel.11 Then, in November, he granted eight countries a ‘temporary’ waiver: Japan, China, India, South Korea, Greece, Italy, Taiwan and Turkey. Meanwhile, he strong-armed Saudi Arabia into increasing output to 10.7mbd (million barrels a day).12 That, combined with booming production in America itself - primarily due to the shale oil revolution - sent prices crashing. US crude now hovers at around $50 a barrel.

Yet, due to flatlining wages in the US, precarious employment and the capitalist system’s relentless promotion of selfish individualism, Trump’s cheap oil policy resonates with a wide enough body of electors. Through turning a diplomatic blind eye, threats of trade wars, sweeping away environmental red tape and giving free reign to market forces, many imagine that the cheap oil they need to heat their homes and fill their petrol tanks will be guaranteed … well, at least for the moment.

Naive radicals, meantime, treated peak-oil pundits as modern-day prophets. Via tweets, blogs, websites, YouTube channels, etc, ‘peakism’ came to be a not inconsiderable “sub-culture”.13 Sadly, much of the organised left bought into this sub-culture. The officially promoted slogan on the huge 1991 and 2003 anti-Iraq war demonstrations was ‘No blood for oil’. As if the wars of George HW Bush and George W Bush were driven first and foremost by soon-to-be-exhausted oil supplies. It was not just George Galloway, John Rees, Lindsey German and Andrew Murray. The Socialist Party in England and Wales too presented peak-oil theory as verity: “Globally, it is believed that the world is close to the peak for oil.” With oil prices soaring towards record highs, Peter Taaffe’s confessional sect insisted that the “key reason for the two wars with Iraq was the USA’s need for oil”.14 The fact that the US has never imported significant quantities of Middle Eastern oil did not register. As of 2015, a mere 19% of US oil imports came from that region.15 The rest from Canada, Mexico, Colombia Venezuela, etc.

Of course, the US does have a fundamental interest in exercising control over the Middle East - achieved through fleets, military bases, allies and bribes - and, therefore, giving itself a decisive “strategic leverage” over potential imperial rivals: ie, China, Japan and the European Union.16 Their oil can be choked off at a whim.

Not to be outdone, the Socialist Party of Great Britain approvingly quoted Matthew Simmons, a former energy advisor to George W Bush: “Securing adequate oil supplies was … an important element in all the major wars of the 20th century and in the United States’ two most recent interventions in the Middle East.” The SPGB writer obviously agreed and added that oil is probably “about to reach its maximum rate of production”.17 Nor should the hapless Alan Thornett go unmentioned. Writing in the March 2012 edition of Socialist Resistance - “with the price of oil only likely to go up” - this dedicated follower of every trite fad and passing fashion even managed to explain the Falklands War, 29 years before, with reference to “peak oil”.18

No less bizarre are the widely dispersed refugees who have fled from the organised left. Where hopes were once placed in Stalin’s Soviet Union, Mao’s China and even Enver Hoxha’s Albania, there comes a banking on peak oil. With oil supplies supposedly running out, they assure themselves that a new dark age is in the offing. The pampered existence of labour aristocrats in the metropolis will thereby come to a sudden end and the desperate masses will be forced to embrace an anti-globalist “peasant socialism”.19


The more sober-minded - and not only Jack Conrad - point out that the “predictions of catastrophe” regularly trotted out by peak-oil pundits are “steeped” in the doctrines of Thomas Robert Malthus and his theory of “land”, “scarcity” and “overpopulation”.20 Malthus (1766-1834) was, of course, a Church of England cleric, an economist and a hugely influential apologist for the most heartless, brutal forms of capitalism. He famously argued, in his Essay on the principles of population (1798), that the suffering, the misery, the degradation of the poor was unavoidable … given their irresponsible tendency to produce too many children:

The faster population increases, the more help will be got to draw off the water, and consequently an increasing quantity will be taken every year. But the sooner, undoubtedly, will the reservoir be exhausted, and the streams only remain. When acre has been added to acre, till all the fertile land is occupied, the yearly increase of food will depend upon the amelioration of the land already in possession; and even this moderate stream will be gradually diminishing. But population, could it be supplied with food, would go on with unexhausted vigour, and the increase of one period would furnish the power of a greater increase the next, and this without any limit.21

Because land is finite it could only furnish so much food; meanwhile the poor produce too much in the way of mouths that have to be fed. True, Malthus accepted that agricultural productivity might improve over time. Subsistence, however, “increases at an arithmetical ratio” (ie, 1,2,3,4,5 …). Meanwhile, he insisted, population, if unchecked, “increases in a geometrical ratio” (ie, 1,2,4,8,16 …).22 Hence, the only solution, according to parson Malthus, was late marriage, sexual abstinence or, failing that, allowing nature to take its grizzly course with disease and starvation.

A blasphemy against both nature and humanity.

Blaming the social horrors of late 18th century capitalism on the lowest, the most desperate stratum of the working class admirably suited the penny-pinching oligarchical authorities. With a good conscience, wealthy gentlemen could explain away poverty - not by admitting ruthless exploitation, but by the workings of god’s divine laws. Leaving people to starve therefore amounted to a Christian duty (the British state did just that during the 1845-52 Irish famine). The same callous political economy saw Malthus urging the United Kingdom parliament to sweep away the niggardly poor laws inherited from Tudor times (a late feudal system of social security).

According to Malthus, though the poor laws were “undoubtedly instituted for the most benevolent purpose”, they were sheer folly.23 Interfering with the natural order of things only encouraged those living on the edge of destitution to further augment the surplus population.

Understandably, Frederick Engels lambasted Malthusianism. He described it as “the crudest, most barbarous theory that ever existed, a system of despair”, which absolved the state from any duty to come to the aid of the hungry.24 But Engels did not reject Malthus and his misanthropic population theory on the basis of moral outrage alone. The underlying logic was transparently bogus. If there were too many people in 18th century England, there must have been too many people when god first made Adam and Eve. After all, they were already possessed of the same innate tendency to reproduce in excess of the available means of subsistence.

Engels also maintained that science and technology grows geometrically. Physics, chemistry, mechanical engineering, oceanic shipping, rail transport, methods of storage, postal communications, agricultural technique, etc had all been revolutionised and revolutionised again. As a result, Australia, North America and South America were able to supply Europe with grain, sugar, fruit, meat, wool, cotton, fertilisers and other raw materials in abundance.

Therefore, the desperate condition of the poor should be blamed not on natural laws, but the laws of capitalist society. Overpopulation did not result from an excess of people in relationship to the means of subsistence. No, overpopulation comes about because of the periodic overproduction of capital and, as a consequence, capital’s diminished requirement for labour-power (hence the reserve army of labour).

Rainfall, sunshine and grass set an absolute limit on the number of wildebeest, zebra and gazelles roaming on the Serengeti (note, Charles Darwin’s Origin of the species was inspired, in no small part, from his reading of Malthus). Engels, however, emphasised that human society is subject to a higher order of determination than the animal kingdom. Our population numbers result not just from nature. Historical laws, the mode of production, class struggles and technological progress, in fact, play the decisive role.

The same surely applies to oil.


Peak oil is by no means a new theory. Marion King Hubbert (1903-89), an unjustly famous Shell geologist, presented a paper in 1956 which maintained that, for any given geographical area, from an individual oil field to the planet as a whole, the rate of oil production would, over time, resemble a bell curve. Overall US oil production, he figured, would peak some time between 1965, which he considered most likely, and 1970, which he considered the outlier. Global oil production was set to peak around about 2000.25

The following year - ie, 1957 - admiral Hyman Rickover discussed the fossil fuel era in the same endist terms - he envisaged the “ultimate disappearance of automobiles, trucks, buses and tractors”, because oil would inevitably run dry.26 In that Malthusian spirit, the Club of Rome think-tank published what was to become an instant bestseller. The limits of growth (1972) predicted not only the end of oil in 1992 - with no increase in reserves - but a whole range of other vital natural resources. Eg, mercury and silver (1985), tin (1987), zinc (1990), copper, lead and natural gas (1993), aluminium (2005-21).27

In point of fact, there have been catastrophic auguries of oil peaking, then fast declining and finally running out, ever since oil was first established as an economically important industry. In 1874 US experts reported that the Pennsylvania oilfields were going to become exhausted within just four years. This, so went the prognosis, would mark the end of the US oil industry.

Then, as within our own time, it is when prices are considered abnormally high that peak-oil punditry gains its particular traction. Hence the widespread acceptance of such punditry during the early 1970s, late 1970s, early 1980s and early 1990s. The same thing happened over 2002-08, when oil prices appeared to be inexorably heading towards $150 a barrel.

High prices are equated in the popular mind with supply shortages. Yet, instead of wells running dry and mounting geological problems, a better, more realistic explanation for the repeated oil-price ups and downs lies in capitalism’s economic cycle and the interweaving - in part determining - outbreak of wars, state decisions and class struggles: eg, the 1973 Arab-Israeli war, the 1975 Portuguese revolution, stagflation and the rollback of the post-World War II social democratic settlement, Iran’s revolution and the Soviet intervention in Afghanistan, the 1980-88 Iraq-Iran war, the 1985-88 inflationary boom, the 1989-91 collapse of bureaucratic socialism, Saddam Hussein’s 1990 invasion of Kuwait, the 1991 US-UK ‘liberation’ of Kuwait, etc. The 21st century began with the spectacle of al Qa’eda terrorist attacks on New York and the Pentagon (2001), the US-UK invasion of Afghanistan (2001) and the US-UK invasion of Iraq (2003). There followed, of course, the subprime and banking crisis (2007-08) and the Arab spring (2011-12). All such events impact on the price of oil.

Indeed, there are good reasons not to treat the price of oil simply as a function of ordinary capitalist operations. Companies such as BP, Sinopec, Royal Dutch Shell, ExxonMobil, Total and Chevron invest variable capital to employ workers and constant capital to purchase the means of production … and they realise a normal rate of profit for their investors. Standard and Poor’s Global Oil Index shows annual returns running at 2.17% over a 10-year period.28 Yet companies such as BP, Sinopec, Royal Dutch Shell, ExxonMobil, Total and Chevron also have to secure leases from the appropriate state, if they are to explore for, extract and market oil. They have to pay royalties, according to a combination of what they produce and the highly volatile price of oil. In other words, they have to pay rent to the state (and other landowners).

In the first half of the 20th century, oil production in the Middle East amounted to naked robbery. There was colonialism and semi-colonialism. Select companies were granted monopoly privileges, open-ended concessions - sometimes covering whole countries. Royalties were minimal. Now we have a global oil industry and fierce competition. There are market prices and differential rents. Extracting oil from the North Sea depends on making a profit from what is a marginal operation. Costs hover at around $44. By contrast, the cost of extracting a barrel of crude oil in Saudi Arabia is a mere $9.29 That includes transport, administration and reinvestment in plant and machinery. If we allow for an average profit, what remains is rent. Therefore, what is going on at a global scale is a redistribution of surplus value … but it is not only rentier states such as Saudi Arabia which benefit. A not inconsiderable portion of its petrodollars find their way to the US and the UK - not least in the form of arms sales.


The case of peak coal is worth mentioning here. In 1865 the British economist and mathematician, William Stanley Jevons, published his book The coal question. The subtitle is revealing: An inquiry concerning the progress of the nation, and the probable exhaustion of our coal mines. Jevons argued that British industry relied on cheap coal and that this constituted an Achilles’ heel. “Are we wise,” he rhetorically asked, “in allowing the commerce of this country to rise beyond the point at which we can long maintain it?”30

Given that demand grows exponentially, and that coal is a finite, non-renewable, energy source, Jevons warned that having to mine deeper seams and having to incur greater costs heralded approaching limits. His central thesis was that Britain’s global hegemony was in danger and that economic stagnation was unavoidable. Interestingly this doom-mongering won him national fame and many academic prizes. In fact, Jevons anticipated peak coal using exactly the same tropes we encounter when it comes to peak oil: ubiquitous applications, local exhaustions, the necessity of going to ever greater geological depths, growing rates of usage, estimates of proven reserves, EROEI, etc.

Jevons rejected Malthusian theory, when it came to agriculture: he saw no limits to the productivity of land. However, that could not apply to coal mines. Coal is a finite resource. Logically, at some point, output had to go into decline. All Jevons had to do was start with estimates of British coal reverses - no more than 90 billion tons. Jevons then subtracted expected rates of consumption and he arrived at his shocking answer. Coal, he reckoned, would be exhausted in 50 or 60 years. There was no escape. He discounted possible substitutes.

Obviously, Jevons was spectacularly wrong. However, there is one aspect of his argument that made a lasting contribution to scientific thinking - the Jevons paradox. Going against the grain of common sense, he insisted that, far from increased energy efficiency leading to reduced usage, the opposite would happen. Greater energy efficiency generates increased demand.31

Of course, just before the outbreak of World War I, the Royal Navy, under Winston Churchill, first lord of the admiralty, had begun the transition to oil (compared with coal, it was far less bulky, easy to store and quicker to refuel, and it provided for greater speeds and ranges, because of a far superior weight-to-energy ratio … and, with Persia reduced to an Anglo-Russian semi-colony, oil was wonderfully cheap).3

British coal did, in fact, peak in 1912. Production amounted to around 200 million tons (about half the world’s total output). However, since then, in global terms, both production and reserves have considerably increased. Nowadays, global coal production stands at 7,708 million tons annually.33 Reserves are given as 948 billions tons (recoverable).34

As Hossein-Zadeh says, perhaps the biggest problem with peak-oil theory is the “extrapolation or transition from micro to macro level”.35 What is true for an existing oil well or oilfield is extended to global oil production. Every operating, or producing, oil well or oilfield will reach a maximum or peak flow rate, after which output declines to the point - temporary or permanent - of shutdown. Eg, UK taxpayers face “an overall bill of £60 billion” for decommissioning gas and oil fields in the North Sea.36

There are limits to all things in nature - in about five billion years the sun is expected to cease being a main-sequence star and balloon into a red giant; life on planet Earth might be sustainable for another billion years; an individual can only consume so much food and drink; there are only 24 hours in a day, etc. So, when peak-oil pundits say there are limits to global oil production, they are not saying anything profound. It is a truism, which cannot explain past, current or future rates of output or patterns of consumption. But it certainly does not follow that, because there are limits, we are just about to arrive at peak-oil production.

Peak-oil pundits refuse to confront an inconvenient truth: the discovery of new oilfields, technological innovation and the introduction of other sources of energy, including renewables, offset existing rates of depletion. No wonder alarmist predictions are repeatedly confounded. Even when it comes to conventional oil, proven reserves outgrow those fields and wells that have peaked or become exhausted. Hence, in 2016, according to BP, the world’s total proven oil reserves were marked up by 15 billion barrels (0.9%) to 1,707 billion barrels - “sufficient to meet 50.6 years of global production” at 2016 levels of consumption.37 The increase came largely from Iraq (+10 billion barrels) and Russia (+7 billion barrels).

Historically, there has been an institutional bias towards underestimation. Morris Adelman pointed out that in the 1920s Exxon and Mobil were “sure” that the flat planes of Kuwait and Saudi Arabia would contain “no oil at all”. Even in 1944 “a special expert mission estimated Persian Gulf reserves at 16 billion proved and 5 billion probable”.38 Yet, by 1975, those same fields had “already produced 42 billion barrels and had 74 billion remaining proven reserves. Nowadays proven reserves in the Persian Gulf are put well above 800 billion barrels.39

There is also the phenomenon of post-peak bounceback. The case of the United States is instructive. Having peaked in 1972 and then slowly gone into a decline, the curve began to rise again in 2012. By the middle of 2018 output neared 11.0 million barrels daily - the highest level since 1972. And, of course, simultaneously, there has been a significant shift to natural gas and renewables.

Today’s depressed oil prices are, needless to say, hardly conducive to sustaining marginal operations or stimulating further exploration and innovation. Nevertheless, against industry expectations, though US shale companies were at first badly hit by the 2014 price collapse, they have become far more efficient and can now expect to profitably compete with other sources.40


It must be emphasised that, in general, the category of ‘proven reserves’ is not an estimate of what oil deposits actually lie beneath the ground.41 ‘Proven reserves’ refers to oil that can be commercially obtained with existing technology and existing price levels. Hence proven reverses are a “short-term, static view of the future”.42 Oil companies will, of course, only invest if they can expect a financial return. They are not driven by the imperative to maximise output. Hence, estimates of real oil reserves will be considerably downplayed. By definition the vast sources of oil that are currently unprofitable are excluded. However, it should be added that reserves which may be considered unviable from the viewpoint of private capital might present a golden opportunity for a state with grand ambitions. Eg, while capital aims to realise a profit, a state may well seek use-values (eg, with the aim of national self-sufficiency, military requirements, driving forward economic growth, etc).

Here the experience of the Soviet Union is instructive. Bureaucratic socialism sought to maximise output and was, therefore, prepared to invest massive resources into long-term oil and gas projects. Siberia, the far east, the inhospitable Arctic was explored, settlements founded and super-deep drilling perfected. The Soviet Union thereby became an energy superpower. Not surprisingly, the 1973 oil crisis proved to be a boon. Oil exports allowed the Soviet Union to obtain western technology on a considerable scale and thereby put off the system’s inevitable demise. Having peaked in the 1980s, oil production plunged by a staggering 50% in the 1990s. Not the result of natural limits though, but the “economic and political freefall” associated with capitalist restoration.43 Oil production rebounded in the 21st century, reaching a post-Soviet high of 10.8 million barrels daily in January 2017. Russia today is, once again, an energy superpower and ranks as the world’s number-two oil producer and exporter.

As with Malthus, peak-oil theory fails to grasp the revolutionary role of science and technology. Satellite imaging, 3D computer modelling and sniffer devices have transformed the ability of geologists to locate oil; horizontal and directional drilling, jack-up rigs, deep-water production units and hydraulic fracking allows for the exploitation of previously unprofitable sources. The net effect is to reduce costs. Simultaneously, smart technology, energy storage, radically improved industrial methods, stiffer building regulations, combined with national and businesses interests in driving forward competitiveness, supposedly serve to reduce demand. According to Climate Progress, energy efficiency has long been the biggest and cheapest “new” source of energy by far. Energy efficiency technologies have also been called a “$18 trillion windfall” by the International Energy Agency. Certainly cars, aeroplanes and other forms of transport have become far more fuel-efficient.

For oil industry insiders, peak oil no longer refers to the tipping point, when the world’s supplies start to fall. Instead, peak oil has been turned into its opposite: when the world’s demand for oil starts to fall. Wood Mackenzie, one of the world’s leading oil consultancies, forecasts that global oil demand will peak within 20 years as a result of the “tectonic” shift in the transport sector towards electric cars and autonomous vehicles. Robo-taxis are expected to become commercially viable in 2030 and widely used by 2035. This prediction illustrates how projections of peak demand - once confined to the fringes of energy planning - “have become accepted within the mainstream, and are already shaping how the world’s biggest oil and gas companies will invest in the future”.44 Apparently, many of the world’s oil majors have begun to embrace the “energy transition”, preparing for a future when oil demand is no longer rising.

However, others take a more cautious approach - chiefly ExxonMobil and the giant, state-owned Saudi Aramco, which have “pushed back against the idea that demand for their primary products could stop growing within the lifetimes of their top executives”.45 While these companies expect demand for petrol to peak around 2030, they are investing in petrochemicals in order to meet the rising demand for plastics in so-called emerging markets.

Nonetheless, with one eye on an ecologically concerned public and the other on reducing dependency on imported oil and gas, Germany plans to progressively bring down primarily energy consumption from a 2008 base, by 8.7% (2014), 20% (2020) and 50% (2050).46 It is far from unique. Japan, Switzerland, Austria, Denmark and other energy-poor countries are determined to follow a similar course.

Even that energy glutton, the USA, can be cited. Bloomberg reports: “The US economy has … grown by 10% since 2007, while primary energy consumption has fallen by 2.4%.”47 There are, of course, a number of explanations (eg, offshoring industrial production to China, the increasing role of finance capital, the knowledge economy, etc). Undeniably, though, in terms of its basic unit, at the level of the company, the personifications of capital will ruthlessly seek to drive down costs - in other words, reducing inputs of fixed capital, labour-power, wages and raw materials to the barest minimum. A phenomenon Marx discussed in Capital volume one.

And yet, as a system, capital is fundamentally and inescapably predicated on endless self-expansion (M-C-M1). For capital in general, the distinction between renewables and exhaustible raw material is meaningless. What matters is accumulation. Hence, as Jevons maintained, energy efficiency could well lead to greater usage. Exactly what seems to be happening. Overall consumption of oil and coal has gone up and up. In September 2018, oil consumption neared 100 million bpd - more than twice the level it was 50 years ago. Global demand grows by around 1.5% per annum.48 And countries such as China, India and Brazil more than make up for any primary-energy decreases in the capitalist metropolis. In point of fact, the US Energy Information Administration projects a 48% increase in “world energy consumption” between a 2012 base and 2040.49 However, while conventional oil and coal consumption will doubtless grow, the expectation is that they will do so at a snail’s pace. It is other sources of energy that will make the running.


Peak-oil pundits pay far too little attention to alternative sources of energy, both actual and potential. They include thermal, solar, wind, bio and nuclear energy. Crucially, they also include, of course, natural gas. Natural gas now accounts for 27% of energy supplies globally. Because of the steady rise in the production of tight gas, shale gas and coal-bed methane, it is calculated that by 2050 natural gas will become the world’s main source of energy. Then there are methane hydrates (methane frozen in ice crystals). Deposits are so vast that, “when we develop the technology to bring them to market, we will have clean-burning energy for 2,000 years”.50 Breathless, post-Paris 2015 headlines announcing the “end of the fossil-fuel era” are therefore grossly premature, to say the least.51

Nor, frankly, do peak oil pundits treat what is sometimes called ‘unconventional’ oil with the seriousness it deserves: eg, tar sands, heavy oils and shale oil.

l The world’s most notable tar sand operation is located in the Canadian province of Alberta. Easily accessible, the tar sands lie temptingly just below the surface. Total production has steadily climbed and now stands at around 2.3 mbd. The world’s estimated reverses of tar sand oil are put at around 2 trillion barrels, with Canada counting for the lion’s share. Industry sources report that, although tar sand oil was originally considered uneconomical, the marginal cost has dropped from $30 a barrel to just over $8.52

l Heavy oil is extracted, transported and refined, using the same equipment employed by the conventional oil industry. It is ‘unconventional’ only because the cost of refining is at the moment considerably higher - by between $10 and $20, compared with a barrel of ‘sweet light’ Saudi crude. Venezuela puts its reserves at 1.2 trillion barrels. The country’s heavy oil belt stretches from the mouth of the Orinoco River, near the Caribbean island of Trinidad, across to the eastern slopes of the Andes. This being part of an oil-bearing trough that some geologists believe may be continuous along the entire South American continent, down to the Falkland Islands in the bitterly cold South Atlantic. Only a few segments of this gigantic field have been fully explored, yet even those parts have been estimated to contain some three to four trillion barrels, with perhaps one third recoverable, given current technology.

l Oil shale requires extensive processing and consumes large amounts of water. Still, reserves far exceed those of conventional oil, and costs are bound to fall, as newer and more efficient processing techniques are invented and become available. Estimated reserves are staggering, the highest figure I have come across being 2.1 quadrillion barrels.53

Given the ongoing scientific and technological revolution, such energy sources are bound to rise in significance. A considerable reduction in the relative importance of conventional oil is more than likely. The US EIA is of the view that oil’s share of global energy consumption will fall to 30% in 2040. However, this will not happen because natural limits have been reached. As argued, oil is not about to run out.


Medieval society did not embrace wind and water-power because slave and animal muscle-power had become exhausted. Nor did mature capitalism turn to coal because the wind had stopped blowing and water had stopped flowing. In turn, late capitalism shows all the signs of reducing its dependence on conventional oil, not because natural limits have been reached, but because of the growing availability of other, cheap, energy supplies.

Incidentally, nothing could be more stupid than to equate capitalism and the oil industry, as if the two were synonymous. Capitalism considerably predates the Royal Navy’s turn to oil, or for that matter the coal industry that was conjoined with the widespread introduction of steam-power. Mercantile capitalism thrived in classical antiquity. Industrial capitalism began its stunning rise to dominance beginning in the 13th and 14th centuries. Profit-generating windmills and watermills - perfected by gears and other such devices - formed the primary energy source for flour-milling, iron-forging, wood-sawing, leather-tanning, etc.54

Obviously, late capitalism’s relative downgrading of conventional oil usage is no cause for celebration. An existential fear of global warming has persuaded governments of almost every hue to subsidise thermal, solar, wind, bio and nuclear energy. A combination of the good, the bad and the downright ugly.

Thermal heating works brilliantly in geologically blessed locations - most notably Iceland and New Zealand. However, it accounts for a mere 0.07% of the world’s primary energy consumption. That figure cannot be expected to grow by much. Solar and wind energy is equally benign, but is of far greater importance in terms of the energy mix. Solar and wind accounts for some 10% of the US energy total. And in January 2017 the World Economic Forum reckoned that, in cost terms, wind and solar power either “matched” that or was “cheaper” than fossil fuels.55

Aircraft will, for the foreseeable future, rely on specialist aviation fuels (largely kerosene based blends, though there are ongoing experiments with biofuels: ie, so-called sustainable aviation fuels). However, in truth, biofuels are an invitation for big business to replace biologically diverse rainforests with a thoroughly denatured monoculture. A ghastly act of ecocide.

As for nuclear power, it not only comes with a gigantic price tag. Enormous public health risks are involved too. Because of the inevitability of human error, accidents are surely bound to happen: Three Mile Island, Chernobyl, Fukushima. If nuclear fission could be replaced with nuclear fusion, it would be another matter. But that requires extremely high energy inputs. As of 2018, corresponding outputs remain negative. Hence, for practical purposes, that particular technology must, for the time being at least, be counted alongside the perpetual motion machine and warp drive.

Meanwhile, tar-sands oil, heavy oil and shale oil are horribly polluting. They are also ecologically destructive. In Alberta thousands of square miles of top soils are being bulldozed, valuable boreal forest uprooted, wetlands irreversibly ruined and endangered animal species, such as the caribou, further denuded.

Nor will the turn towards natural gas and unconventional oil do anything to reduce carbon emissions. Primary energy consumption is set to increase and, therefore, anthropogenic CO2 emissions - the main cause of global warming - are unlikely to be capped. Paris did not even intend to do that. The goal was to limit the rise in global temperatures to 2.7°C above pre-industrial levels. There is a real danger, however, that by 2100 the rise could be more like 4°, and with that will come severe disruption to agricultural systems and food supplies, mass plant and animal extinctions, substantial and permanent polar ice losses, higher sea levels and the distinct possibility of an abrupt shift in the climatic system. As David Attenborough told the COP24 conference in Katowice, “If we don’t take action, the collapse of our civilisations and the extinction of much of the natural world is on the horizon.”56

However, the hope for humanity lies not in pleading before the “excellencies, ladies and gentlemen” who constitute today’s “decision-makers”. Because they are wedded to the interests of capital, they are very much part of the problem - not in any way part of the solution. The only hope for humanity lies in the rule of the working class, breaking with the destructive logic of capital and refounding society on the basis of the communist principle of production for need l


1. See, for example, M Li Peak oil, climate change, and the limits to China’s economic growth London 2014; K Aleklett Peeking at peak oil New York NY 2012; KS Deffeyes Hubbert’s peak: the impending world oil shortage Princeton NJ 2009; P Roberts The end of oil: on the edge of a perilous new world Boston MA, 2004; M Klare Resource wars: the new landscape of global conflict New York NY 2002.

2. Figs for 2017 International Energy Agency - www.iea.org/weo2017.

3. See MC Ruppert Confronting collapse: the crisis of energy and money in a post-peak oil world White River VT 2009; J Tainter and TW Patzek Drilling down: the Gulf oil debacle and our energy dilemma New York NY 2012.

4. See Ismael Hossein-Zadeh, ‘The recurring myth of peak oil’: www.counterpunch.org/2008/10/01/the-recurring-myth-of-peak-oil. Hossein-Zadeh is professor emeritus of economics at Drake University, New York.

5. www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/country-and-regional-insights/middle-east.html.

6. FW Engdahl, ‘Perhaps 60% of today’s oil price is pure speculation’: www.globalresearch.ca/perhaps-60-of-today-s-oil-price-is-pure-speculation/8878.

7. www.doi.gov/pressreleases/secretary-zinke-citing-record-energy-growth-under-president-trump.

8. www.whitehouse.gov/briefings-statements/president-donald-j-trump-wants-reliable-affordable-energy-fuel-historic-economic-growth.

9. www.eia.gov/todayinenergy/detail.php?id=37053.

10. Financial Times November 29 2017.

11. The Daily Telegraph May 16 2018.

12. www.bloomberg.com/news/articles/2018-10-03/saudis-raise-oil-output-to-near-record-amid-pressure-from-trump.

13. M Schneider-Mayerson Peak oil: apocalyptic environmentalism and libertarian political culture Chicago IL 2015, p1.

14. B Hopwood, ‘Peak oil’ Socialism Today June 2006.

15. en.wikipedia.org/wiki/United_States_energy_independence.

16. See A Mahdi Energy and US foreign policy: the quest for resource security after the cold war London 2012.

17. www.worldsocialism.org/spgb/socialist-standard/2010s/2017/no-1349-january-2017/peak-oil-and-capitalism.

18. socialistresistance.org/the-falklands-oil-rush-and-thatchers-war/3329.

19. peakoil.com/publicpolicy/towards-a-peasant-socialism.

20. S Lilley, D McNally, E Yuen and James Davis Catastrophism: the apocalyptic politics of collapse and rebirth Oakland CA 2012, p19. Many other such books, articles and studies could be quoted. Suffice to say, nowadays, the term ‘Malthusianism’ refers not only to pessimism based on concerns about overpopulation … but resource scarcity (and not only land, but coal, oil, gold, zinc, copper, etc).

21. TR Malthus An essay on the principle of population London 1798, p34.

22. Ibid p4.

23. Ibid p92.

24. K Marx and F Engels CW Vol 3, London 1975, p420.

25. M King Hubbert, ‘Nuclear energy and the fossil fuels’, fig 20, p22: www.hubbertpeak.com/hubbert/1956/1956.pdf.

26. See www.resilience.org/stories/2007-06-13/commemorating-admiral-rickover39s-1957-speech-energy.

27. See www.donellameadows.org/wp-content/userfiles/Limits-to-Growth-digital-scan-version.pdf.

28. As of December 3 2018 - see us.spindices.com/indices/equity/sp-global-oil-index.

29. www.fool.com/investing/2017/03/19/you-wont-believe-what-saudi-arabias-oil-production.aspx.

30. oilcrash.net/media/pdf/The_Coal_Question.pdf - see p211.

31. See chapter six of The coal question (note 30 above); also, for a more recent treatment, JM Polimeni, K Mayumi, M Giampietro and B Alcott The myth of resource efficiency: the Jevons paradox Abingdon Oxon 2009.

32. www.dtic.mil/dtic/tr/fulltext/u2/a524799.pdf.

33. www.iea.org/publications/freepublications/publication/KeyCoalTrends.pdf.

34. en.wikipedia.org/wiki/Coal#World_coal_reserves.

35. I Hossein-Zadeh, ‘The recurring myth of peak oil’ Counterpunch October 1 2008.

36. The Guardian June 29 2017.

37. www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy/oil/oil-reserves.html.

38. M Adelman The genie out of the bottle: world oil since 1970 Cambridge MA 1993, p16.

39. Totted up from 2012 figures - see en.wikipedia.org/wiki/Oil_reserves.

40. oilprice.com/Energy/Crude-Oil/Profitability-Is-Finally-Within-Reach-For-US-Shale.html.

41. There is, in fact, no standard. While most countries report proven reserves, using conservative estimates from existing oil fields, others, like Venezuela, report yet-to-be-discovered reserves on the basis of geological probability.

42. I Hossein-Zadeh, ‘The recurring myth of peak oil’ Counterpunch October 1 2008.

43. M Goldman Oilopoly: Putin, power and the rise of the new Russia Oxford 2010, p11.

44. Financial Times July 16 2018.

45. Ibid.

46. www.isi.fraunhofer.de/isi-wAssets/docs/x/de/publikationen/National-Report_Germany_November-2012.pdf.

47. thinkprogress.org/u-s-economic-growth-decouples-from-both-energy-and-electricity-use-16ae78732e59.

48. www.reuters.com/article/us-oil-demand-peak/now-near-100-million-bpd-when-will-oil-demand-peak-idUSKCN1M01TC.

49. www.eia.gov/todayinenergy/detail.php?id=26212.

50. R Cavaney, ‘Global oil production about to peak?’ World Watch January-February 2006.

51. The Guardian December 12 2015.

52. oilprice.com/Energy/Oil-Prices/Forget-20-Oil-Prices-At-8-Per-Barrel-In-Canada.html.

53. See hubbert.mines.edu/news/Youngquist_98-4.pdf; also, DC Duncan and VE Swanson, ‘Organic-rich shale of the United States and world land areas’: pubs.usgs.gov/circ/1965/0523/report.pdf.

54. See J Gimpel The medieval machine: the industrial revolution of the Middle Ages London 1992, pp1-27, 24-28.

55. The Independent January 4 2017.

56. unfccc.int/sites/default/files/resource/The%20People%27s%20Address%202.11.18_FINAL.pdf.