Is the world running out of oil?

Knowing when the last trickle of the world’s oil sputters out is irrelevant. More important is when the production of oil peaks. After that, production will decline annually regardless of higher prices or improved technology.

The concern about when world oil production is at its highest comes from what is the most accurate economic forecast ever made. In the 1950s, American geologist M.K. Hubbert predicted that domestic oil production would peak in 1970 and steadily decline thereafter. As predicted, production rose to about 9.4 million barrels per day in 1970 and has since dropped to 4.4 MBD, in 2007. Since the 1980s, analysts have used the same method to forecast the peak in world oil production. Each year, they proclaim the world’s ability to produce oil has nearly topped out. Each year, they’ve been wrong — because Hubbert’s method can’t tell the difference between slower demand and depletion of oil. But the recent and steep rise in oil prices — coupled with booming Asian demand — has given these analysts’ warnings a new degree of believability.

Claims of an imminent peak are disputed by those who say there is plenty of oil still in the ground, adding that getting it into refineries is simply a matter of political will and freeing the market. This argument seems to have won the day, at least in Washington.

Republicans argue that Congress should open the oceans and Arctic National Wildlife Refuge to drilling. Democrats maintain that consumers should be allowed to sue OPEC for manipulating the market. Neither party acts as if a peak in global oil production is possible in the near future.

But this optimism is misplaced. The most hopeful assessment of world oil supplies indicates that another 3 trillion barrels remain (the world has produced about 1 trillion so far). Even if this estimate proves correct, world oil production will peak in the early 2030s. If the pessimists are right, less than a trillion barrels remain and the peak could come in five years. Whether the optimists or the pessimists are correct, the peak will be on us within this 20-year window between 2009 and 2031, unaffected by speeding or slowing growth in oil demand or production.

So what should we do? Even if the best-case-scenario 2034 date is correct, the time to act is now. Once oil production starts to decline, the world will be short 10 million barrels per day, or the equivalent of Saudi Arabia’s oil production. Investing now to produce that alternative energy is money better spent than drilling the last dregs of offshore oil or paying lawyers to sue OPEC.

Robert K. Kaufmann is a professor at the Center for Energy and Environmental Studies at Boston University.