|Fig. 1: Total Energy Production by Source  (Courtesy of the U.S. Department of Energy).|
Peak Oil (or Theory) postulates the point at which the world's oil supplies go into irreversible decline. Based upon M. King Hubbert's 1956 statistical modeling, United States oil production would peak between 1965 and 1971.  He projected a roughly symmetrical curve of production, being initially correct with his call of a peak. However, his predictions proved premature since US production has been increasing again steadily since 2010, breaking out of the Hubbert Curve.  In the popular imagination the Peak Oil doomsday scenario entailed soaring costs and a strict rationing of, and battle for, leftover reserves. 
The Peak Oil thesis hinges on the supply, or lack, of oil. A peaking in oil production necessitates a decrease in oil sources and thus supply. As currently demonstrated in EIA data, the current U.S. Crude Oil production, as of 2013, is at an average of 7.462 million barrels per day.  Correlated to this is the discovery of new oil fields usable for production. Discover has, however, been steadily declining since then to around 10 billion barrels per year between 2002 and 2007.  Yet this has increased somewhat to a steady rate of 15-20 billion barrels per year since 2010 mainly due to the extensions of additional oil found in existing fields. [6,7] There is, however, discussion over the actual state of world reserves, with concerns being raised about the validity of official reports. For example, in 2004 there was an "evaporation" of 20% of Shell's reserves.  The corporation admitted to overestimating its reserves by 20%, showing how difficult it is for producers to give accurate and tenable accounts of global oil reserves. 
General consensus estimates predicts world oil production to climax between 2010 and 2030, with anything after 2030 deemed impossible. [10,11] The general uncertainty concerning the actual state of global reserves, however, makes a more specific estimate impossible. The majority of papers published after 2010 have been relatively pessimistic. A 2010 Oxford University study predicts production to peak before 2015.  In general, world crude oil production and the quantity and size of proven reserves have been at a record high since 2012. 
As to report by the United States Department of Energy published in 2005, a peaking of world oil production will entail a drastic increase in liquid fuel prices and price volatility, with unprecedented economic, political, and social costs. [14,15] The main problem a peaking of oil production poses is that of price volatility. The Stanford Energy Modeling Forum found that the economy can adjust much better to steady, gradual increases in price than bigger, sudden swings. 
There is, however, criticism of Peak Oil Theory claiming it is unsubstantiated, leading to multiple efforts being undertaken to stem against a peaking of oil and even support the diversification from it. An example of this is algae fuel. One can produce biofuel out of algae via heterotrophic fermentation, allowing for highly controlled conditions. This can possibly generate a very high yield of biomass, better than comparable resources. Importantly, algae-produced fuel seems to not demand extensive distribution modifications. 
Peak Oil Theory is pressing to become an important issue in the light of the search of new oil reserves necessary to counterbalance the increase in demand. However, there is also significant evidence to undermine Peak Oil Theory, with critics citing the diversification from oil as well as the scientific progress made to explore new means of producing it.
© Alexander Liegl. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
 M. K. Hubbert, "Nuclear Energy and the Fossil Fuels Drilling and Production Practice," Shell Development Company, Publication No, 95, June 1956.
 R. G. Miller and S. R. Sorrell, "The Future of Oil Supply," Phil. Trans. R. Soc. A 372, 20130301 (2014).
 R. Gold, "Why Peak-Oil Predictions Haven't Come True," Wall Street Journal, 29 Sep 14.
 "Annual Energy Review," U.S. Energy Information Administration, DOE/EIA-0384(2011), September 2012.
 "The General Depletion Picture," Association for the Study of Peak Oil and Gas, Newsletter No. 100, April 2009.
 C. Johnson, "Oil Exploration Costs Rocket as Risks Rise," Reuters, 11 February 2010.
 D. F. Morehouse, "The Intricate Puzzle of Oil and Gas Reserve Growth," US Energy Information Administration, Natural Gas Monthly, July 1997.
 C. Mortished, Ho w Shell Blew a Hole in a 100-Year Reputation," The Times, 10 Jan 04.
 "Shell: The Case of Missing Oil," Bloomberg Businessweek, 25 Jan 04.
 N. L. Madureira, Key Concepts in Energy (Springer, 2014).
 S. Sorrell eet al., "Oil Futures: A Comparison of Global Supply Forecasts," Energy Policy 38, 4990 (2010).
 N. A. Owen, O. R. Inderwildi, and D. A. King, "The Status of Conventional World Oil Reserves - Hype or Cause for Concern?," Energy Policy 38, 4743 (2010).
 Annual Statistical Bulletin, Organization of Oil Exporting Countries, 2014.
 R. L. Hirsch, R. Bezdek, R. Wendling, Peaking of World Oil Production: Impacts, Mitigation, and Risk Management," Science Applications International Corporation, February 2005.
 R. L. Hirsch, "Peaking of World Oil Production: Recent Forecasts," U.S. National Energy Technology Laboratory, DOE/NETL-2007/1263, February 2007.
 H. G. Huntington, "The Oil Security Problem" in International Handbook on the Economics of Energy, ed. by J. Evans and L. C. Hunt (Edward Elgar Pub., 2011), p. 383.
 J. Ferrell, V. Sarisky-Reed, "National Algal Biofuel Technology Roadmap," U.S. Office of Energy Efficiency and Renewable Energy, May 2010.