upright=1.3|thumb|Hubbert's upper-bound U.S. peak oil prediction (1956) in red, and actual [[lower 48 U.S. states production through to 2016 in green]]
thumb|upright=1.3|A 1956 world oil production model proposed by [[M. King Hubbert, showing historical data and future production – it had a peak of 12.5 billion barrels per year in about the year 2000. , world oil production was about 29.5 billion barrels per year (80.8 Mbbl/day), with an oil glut between 2014 and 2018.]]
Peak oil, or peak extraction of oil, is the hypothetical point when global petroleum demand reaches its maximum rate. The main concern is the carbon dioxide emissions from transportation, which relies heavily on gasoline, diesel and kerosene. Adoption of electric vehicles, biofuels, or more efficient transport (like trains and waterways) could help reduce oil demand.
Peak oil relates closely to oil depletion; while petroleum reserves are finite, the key issue is the economic viability of extraction at current prices. Initially, it was believed that oil production would decline due to reserve depletion, but a new theory suggests that reduced oil demand could lower prices, affecting extraction costs. Demand may also decline due to persistent high prices.
Over the last century, many predictions of peak oil timing have been made, often later proven incorrect due to increased extraction rates. M. King Hubbert 1956 paper, predicted U.S. production would peak between 1965 and 1971; his global peak oil predictions were predictive through the 1990s and 2000s but eventually were deemed premature due to improved drilling technology. From the 100 million barrels per day in 2024 current forecasts for peak oil range from 102 in 2030 to 113 in 2050. These estimates depend on future economic trends, technological advances, and efforts to mitigate climate change.
Supply
thumb|Global liquids production 2000–2015, indicating the component of US tight oil (Energy Information Administration)
Defining oil
Oil, or petroleum, is a mixture of hydrocarbon substances. By its very nature, what "oil" is may vary. The geology of a region affects the type of oil underground. The types of hydrocarbons produced from an oilfield may also vary depending on the geology.
Crude oil generally comes in various 'grades,' commonly classified as "light", "medium", 'heavy", and "extra heavy". The exact definitions of these grades vary depending on the region from which the oil came. Grades of oil are also assessed by API gravity. Light oil flows naturally to the surface or can be extracted by simply pumping it from the ground. Heavy refers to oil that has higher density and lower API gravity. It does not flow as easily, and its consistency can be similar to that of molasses. While some of it can be produced using conventional techniques, recovery rates are better using unconventional methods.
Generally, especially with regard to peak oil, the primary concern regards what is called "crude oil" production (which may also be referred to as "crude and condensate" production in US EIA statistics), which is what is actually refined into the common fuels most people know such as gasoline and diesel fuel, in addition to other common fuels. Other oil production statistics may be named "total liquids production" or "petroleum and other liquids" in EIA statistics. This includes crude oil production in addition to other hydrocarbon liquids, such as natural-gas liquids (NGLs). These two production numbers are distinct and shouldn't be considered the same thing. Using "total liquids" production to refer to "crude oil" production is misleading. The extra liquids included in "total liquids" production do not refine into the same products. It can be misleading as it could be used to inflate the actual amount of crude oil being produced globally.
Where oil may come from is commonly divided into two categories, "conventional" oil sources and "unconventional" oil sources. The terms are not strictly defined and may vary within literature. As a result of the wide range of potential definitions, different oil production forecasts may vary based on which classes of liquids they choose to include or exclude. Some standard definitions for "conventional" and "unconventional" oil are detailed below.
thumb|Total and Non-Tight Oil US Production (up to December 2021). Data from the US Energy Information Administration website
Conventional sources
Conventional oil is oil that is extracted using "traditional" techniques (i.e., in common use before 2000) techniques. Conventional oil commonly refers to onshore oilfields and shallow offshore oilfields that are "easy" to extract.
It has been recognized that conventional oil production has peaked around 2005–2006. What has prevented peak oil from then on is US tight oil production, which rapidly increased since the 2008 financial crisis. Additionally, but to a lesser extent, Canadian oil-sands production has helped increase oil supply since 2008.
In the same way, sources of natural gas production are usually divided into "conventional" and "unconventional".
Unconventional sources
thumb|In 2014, United States crude oil production exceeded imports for the first time since the early 1990s.
Unlike conventional oil, unconventional oil refers to oil that is "difficult" to extract. The number of steps required translates into extremely high production costs. Common unconventional oil sources include:
- Tight oil refers to oil extracted from deposits of low-permeability rock using hydraulic fracturing techniques (commonly referred to as "fracking"). Hydraulic fracturing is a process where a well is first drilled and then fluid containing water, chemicals, and sand is injected at very high pressures to create fractures in the rock. This process has generated controversy as fluid injections may trigger seismic activity, in addition to concerns regarding the chemicals used. Additionally, tight oil is also commonly referred to as "shale oil" due to the oil often being in shale deposits. Due to this nickname, tight oil is often confused with oil shale, which is a different process of oil extraction. This process involves manufacturing oil from the kerogen contained in an oil shale.
- Oil sands are unconsolidated sandstone deposits containing large amounts of very viscous crude bitumen or extra-heavy crude oil that can be recovered by surface mining or by in-situ oil wells using steam injection or other techniques. It can be liquefied by upgrading, blending with diluent, or by heating; and then processed by a conventional oil refinery. The material found in oil sands is an extra-heavy and viscous form of oil known as bitumen.
Other less common unconventional oil sources include oil shale (see article).
Production of tight oil is mainly concentrated in the United States due to world-class geology and ease of borrowing (tight oil production is extremely expensive). Oil sands production is also concentrated in Canada for the same exact reasons (but different type of oil). There are also economic tight oil deposits in Argentina known as the Vaca Muerta Formation, but are less developed than tight oil in the US due to a lack of infrastructure and less capacity to borrow money.
In recent history, production of tight oil led to a resurgence of US production in the 2010s. US tight oil production initially peaked in March 2015 and fell by 12 per cent over the next 18 months; but then production rose again, and by September 2017 production had exceeded the old peak. As of 2024, US oil production, especially tight oil production, is higher than ever thanks to the Permian Basin.
Venezuela has oil sands deposits similar in size to those of Canada, and approximately equal to the world's reserves of conventional oil. Venezuela's Orinoco Belt tar sands are less viscous than Canada's Athabasca oil sands – meaning they can be produced by more conventional means – but they are buried too deep to be extracted by surface mining. Estimates of the recoverable reserves of the Orinoco Belt range from to . In 2009, USGS updated this value to .
While not an actual source of unconventional oil, processes which convert other hydrocarbons are similar to unconventional oil in that they are 'unconventional' and very costly to produce. They include coal liquefaction or gas to liquids which produce synthetic fuels from coal or natural gas via the Fischer–Tropsch process, Bergius process, or Karrick process.
Discoveries
thumbnail|World oil discoveries peaked in the 1960s.
Global discoveries of oilfields peaked in the 1960s at around per year. More recently, 2021 was the worst year for oil and gas discoveries dating back to 1946. This is to be expected of a finite resource. But despite the fall-off in new field discoveries, the reported proved reserves of crude oil remaining in the ground in 2014, which totaled 1,490 billion barrels, were more than quadruple the 1965 proved reserves of 354 billion barrels. A researcher for the U.S. Energy Information Administration has pointed out that after the first wave of discoveries in an area, most oil and natural gas reserve growth comes not from discoveries of new fields, but from extensions and additional gas found within existing fields.
A report by the UK Energy Research Centre noted that "discovery" is often used ambiguously, and explained the seeming contradiction between falling discovery rates since the 1960s and increasing reserves by the phenomenon of reserve growth. The report noted that increased reserves within a field may be discovered or developed by new technology years or decades after the original discovery. But because of the practice of "backdating", any new reserves within a field, even those to be discovered decades after the field discovery, are attributed to the year of initial field discovery, creating an illusion that discovery is not keeping pace with production.
As of 2010, finding new oil had reportedly become much more difficult and expensive, as oil producers had to search through more remote and inhospitable parts of the planet.
Oil reserves
thumb|350px|right|Proven [[oil reserves, 2013]]
Different classes of potential conventional crude oil reserves include crude oil with 90% certainty of being technically able to be produced from reservoirs (through a wellbore using primary, secondary, improved, enhanced, or tertiary methods); all crude with a 50% probability of being produced in the future (probable); and discovered reserves that have a 10% possibility of being produced in the future (possible). Reserve estimates based on these are referred to as 1P, proven (at least 90% probability); 2P, proven and probable (at least 50% probability); and 3P, proven, probable and possible (at least 10% probability), respectively.
As stated previously, oil is divided up into different types, therefore those counting up reserves should keep that in mind. Conventional oil reserves are different than unconventional reserves.