Cheap Oil and the Inevitable Crash

End of Cheap Oil

Marion King Hubbert was an American geoscientist who caused quite a stir in 1956 when he predicted that petroleum production in the United States would peak between the late 1960s and early 1970s. Many in the oil industry shouted that it wasn’t true and questioned his methods. But when the theory proved true in 1970, Hubbert’s peak oil theory began to be taken seriously – though not by the oil companies who sought to make sure consumers remain addicted to petroleum for their cars and to the vast array of products made from oil.

What needs to be kept in mind is that governments around the world have sought to keep the price of oil artificially low, often through subsidies and through tax breaks and incentives to the oil industry giants, some of whom have fed back millions of dollars to support politicians to attempt to maintain the status quo.

The Developed and Developing World are Converging

Modern Western society runs on cheap oil. Many developing countries rely on relatively cheap oil.

Oil greases the works and countries appear willing to fight for what they believe is their right to access to oil. Following the September 11, 2001 terrorist attacks in the United States, the US government’s desire to maintain control over the source of oil saw the invasion of Iraq. Washington claimed they needed to crack down on a government they alleged supported terrorists and had weapons of mass destruction–both claims untrue. The real reason for the invasion were the stocks of untapped oil, as some top government officials later admitted.

This struggle to maintain a supply of cheap oil has indirectly led to the death of thousands of civilians and US and Allied soldiers. Involvement in Afghanistan is also said to be linked to its crucial function as a corridor from the Indian Ocean to the oil fields of Central Asia.

When is world oil supply set to peak, or has it already?

As we now enter the second decade of the 21st millennium, questions remain in the air. Hubbert predicted that world oil supply would peak around 2000. But so far, few people have been ringing the warning bell. This is partly because the oil producing countries and the oil companies do not want to publish confirmed data on the amount of oil reserves. If the world has hit “Peak Oil” and on the slippery slope down to scarcity, such a message could spark a rush to alternative energy and fuels. Some European countries, including Sweden and Germany, have begun acting to wean their economies off cheap oil and seek out alternatives. Some critics charge the George W. Bush administration with criminally maintaining policies to support the oil giants and do little to support alternatives. Even the Barack Obama administration has failed to throw its weight behind “green alternative energy sources,” despite the promises made at election time.

There is little doubt that it is only a matter of time before there is a serious oil depletion crisis. A crash of some magnitude appears inevitable unless governments around the world, including those in India and China, seriously seek viable alternatives.

There are the doomsayers who claim the battle for the last oil will see war. There are also those who see potential in alternative fuels and options, as depicted in the film, “Fuel,” below. But there is little doubt that a Western consumer society on a global scale is unsupportable and new approaches to living have to be considered.


Director Josh Tickell takes us along for his 11 year journey around the world to find solutions to America’s addiction to oil. A shrinking economy, a failing auto industry, rampant unemployment, an out-of-control national debt, and an insatiable demand for energy weigh heavily on all of us. Fuel shows us the way out of the mess we’re in by explaining how to replace every drop of oil we now use, while creating green jobs and keeping our money here at home. The film never dwells on the negative, but instead shows us the easy solutions already within our reach.

To the last drop
The struggle to deal with the pollution of the Alberta tar sands – Al Jazeera