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The Coming End
of Cheap Oil
To Hubbert’s Peak and beyond
by John Attarian

ecently several petroleum geologists havepredicted that within this decade, the world's
annual output of conventional ( easily accessedand extracted crude) oil will peak, then irreversibly
decline. In Hubbert's Peak (reviewed in The Social
Contract, vol. XII, no.2), an excellent, lucid text,
Kenneth Deffeyes, a Princeton professor emeritus andformer Shell Oil research geologist, makes a persuasive
case that output will peak around 2005, give or take a
few years.1
Confirming that resources are finite, this debunks
the cornucopianism of the late Julian Simon. More
importantly, the coming end of cheap oil has disastrous
implications. It makes radical reforms, including an
immigration moratorium, imperative.

R

Hubbert and His Followers
Deffeyes's analysis and title are inspired by Shell
geophysicist and petroleum geologist M. King Hubbert(1903-1989), who over half a century ago first pointed
out that fossil fuels (fuels derived from prehistoricorganic matter-- coal, petroleum, natural gas, oil shale,etc.) exist in fixed, finite, and exhaustible quantity, andstated the necessary implications. In "Energy from Fossil
Fuels" (1949), Hubbert noted that fossil fuels had
accumulated over 500 million years, meaning that any
quantity increase in the next 10,000 years would be nil.
Beginning with the Industrial Revolution, man has
consumed huge quantities of fossil fuels. Once burned,
their energy is gone. “Hence, we are dealing with an______________________________________
John Attarian, Ph.D., with a doctorate in economics
from the University of Michigan, is a freelance
writer living in Ann Arbor. His monograph
Economism and the National Prospect, published byAmerican Immigration Control Foundation, isavailable from The Social Contract Press.

essentially fixed storehouse of energy which we are
drawing upon at a phenomenal rate.” Hubbert wonderedsomberly how long this is sustainable. The supply at any
given time equals initial endowment minus previous
consumption; consumption is proportional to the area
under the plot of annual extraction against time. Hubbert
therefore announced “with certainty’ that a plot of annual
production of any fossil fuel against time “will rise, passthrough one or several maxima, and then decline
asymtotically to zero.” While such a curve could have“an infinity of different shapes,” in all cases the area
under the curve – the amount produced – could at mostequal the original quantity.2
This is the idea underlying the famous Hubbert
curve. Clearly, it is what resource finiteness necessarily
implies. Initial and final extraction of such a resourcemust be zero. In between, output must rise at first, thenfall.
Hubbert estimated the world petroleum supply atroughly 320 billion cubic meters. At 100 billion barrels(hereafter Gb, for gigabarrels) per 16 billion cubic meters,
this comes to 2,000 Gb of oil. Warning of fossil fuels’
eventual exhaustion, Hubbert speculated that water
power could replace them as an energy source. Releaseof energy from fossil fuels, he pointed out, is“unidirectional and irreversible,” and “can only happen
once.” Hubbert concluded – correctly – that humanity’ssituation in the mid-twentieth century, with soaring total
and per capita fossil energy consumption, and soaring
population, was “precarious” and “among the mostabnormal and anomalous” in world history. Neither
reverting to a simpler way of life nor remaining in place
was possible. Fossil fuel exhaustion was inevitable; evenso, we might be able to stabilize world population at some“reasonable” level and sustain industrial civilization. Or
we might simply continue until crises – overpopulation,
resource exhaustion and decline – supervene. 3276

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no liquid or gaseous fuels, “because these can be
Hubbert’s famous “Nuclear Energy and Fossil produced from other fossil fuels which occur in much
Fuels” (1956) pointed out that while initial rates of greater abundance.”5American and world production of coal and crude oil
Subsequently Hubbert presented new estimates ofgrew at exponential rates, because the resource supply oil supplies and peak dates. In 1962, using figures for pastis finite, “physical limits prevent their continuing to do extraction and oil reserves, he estimated American oilso.” This, of course, is just common sense. Recapitulating supply at 175 Gb with production peaking in the late
his earlier analysis, Hubbert presented a stylized 1960s, or 225 Gb and output peaking in 2000. His 1981
graphical depiction of the mathematical relations of the estimates put ultimate world oil supply at 2,000 Gb withproduction cycle of a finite resource: a bell-shaped curve output peaking in 1995, or alternatively fixed at 1975
of extraction plotted against time, with the maximum levels, due to Middle Eastern disturbances, until about
possible area under the curve equal to the initial quantity. 2050.6
Time series plots of crude oil production in Ohio andOther geologists have recently applied Hubbert’s
Illinois, he observed, already manifested rise, peak(s) and method to world oil. In 1996, L. F. Ivanhoe pointed out
decline. Based on current recovery methods, Hubbert that world oil discovery peaked in 1962, that world
estimated the ultimate world crude oil reserves (oil which production tends to parallel discovery with a roughly 32can be removed from known fields with existing year lag, and that most of the world’s large oil fields havetechnology) at 1,250 Gb. Employing known rates of world probably already been found. Using United States
production of crude oil and assuming that the maximum Geological Survey (USGS) world data, and allowing for
production rate would be 2.5 times as high, Hubbert drew diminished consumption after the 1970s oil price shocks,a hypothetical bell curve for world production subject to Ivanhoe put the peak year at 2010, perhaps slightly
the constraint that the area under it could not exceed postponed by discoveries since 1992.7 Two years later,
1,250 Gb. This yielded a peak date of about 2000, with Colin Campbell and Jean Laherrère, then associated with
the qualification that “variations of this assumed the Geneva-based Petroconsultants, asserted that “withinmaximum rate would advance or retard” the peak date. the next decade, the supply of conventional oil will be
He then applied this method to the 48 continental United unable to keep up with the demand.” With forty years’
States, using two estimates of oil reserves, of 150 and experience apiece in the oil industry, they debunked the
200 Gb, and drew two bell-shaped “Hubbert curves.” industry’s optimistic assessment of “proved” reserves
The first estimate generated a prediction that U.S. exceeding a trillion barrels. Reserve figures areproduction would peak in 1965; the second famously –and correctly – predicted a 1970 peak.4
Hubbert qualified this by noting that reserves werebased on existing production techniques, which permitted
removal of only a third of the oil. Secondary-recovery
techniques were improving
though, so in future more oil
Some Estimates of World Oil Supply (Gb) andcould be extracted, thisPredicted Dates of Peak World Oil Production
increasing reserves. Hubbert
Deffeyes
1,800
thought that this improvement
Source(2001)
1,950
would be too slow to affect theWorld Oil
2,120
Hubbert (1949)
Supplypeak date much; more likely,
Hubbert (1956)
Hubbert (1962)
2,000
better recovery would slow the
Hubbert(1981)
1,250
production decline beyond theIvanhoe (1996)
1,250
peak. Moreover, the peak andCampbell-Laherrè
2,000
decline of oil output “does not
Campbell (2000)
necessarily imply” that
Campbell (2001)
1,800
industrialized countries will have277

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problematic, especially for countries outside America,
which can and do inflate reserves for political purposes;
shortly after OPEC modified production quotas in the
1980s to take reserves into account, several members
increased their reserves by some 300 Gb total. Campbell
and Laherrère put total world reserves at 850 Gb, withanother 150 Gb still undiscovered. “There is only so much
crude oil in the world, and the industry has found about
90 percent of it.” Total supply (800 Gb consumed as ofend-1997 plus probable reserves plus still undiscoveredoil), they concluded was some 1,800 Gb, and output“A collision is coming,
then, between risingdemand and falling
annual supply.”

would peak before 2010.8 Campbell’s updated projections
obtained similar results; even broadening conventional oil,to include natural gas liquids in oil wells, generated an
estimate of 1,950 Gb and a peak in 2010.9
Moreover, many specific examples exist of depletion
following Hubbert’s pattern. A table published by the
Association for the Study of Peak Oil & Oil Depletion
Analysis Centre (ASPO-ODAC) shows that several oil
producers have already peaked, e.g., continental U.S.
(1971), Russia (1967), Iran (1973), Venezuela (1970),
Nigeria (1979), Libya (1970), Norway (2000), and Britain(1999).10
Very usefully, Deffeyes explains basic petroleum
geology. Oil exists in layers of “source rock” full ofprehistoric organic matter. The source rocks must be, or
have been, in the “oil window” – depths between 7,500
and 15,000 feet – because 7,500 feet down, temperaturesare sufficiently high, given geologic time, to “crack”
sediments containing prehistoric organic matter into oilmolecules, but below 15,000 feet, the rocks are so hotthat all the oil’s carbon-carbon bonds break and oil
becomes natural gas. Moreover, the oil must be trappedin porous “reservoir rocks,” which must be beneath lesspermeable “cap rocks,” lest the oil seep to the earth’s
surface and disappear.11
Ignorant of petroleum geology, I checked thisagainst some petroleum geology textbooks. Not only is
Deffeyes right, geologists have known this for decades– an important point it turns out. John M. Hunt’s
textbook, Petroleum Geochemistry and Geology (1979)
discusses the “oil window” in detail, pointing out that
“There are limits to the time and temperature (depth) at
which petroleum is formed in economic quantities.”
Moreover, “There is no point in drilling a hole to 20,000
feet … if the kerogen [prehistoric organic matter] is too
immature to generate hydrocarbons or if it so depleted inhydrogen that the generating capability is gone.”The oil
window is a natural phenomenon caused by kerogen’s“thermodynamic instability.” Few reservoirs contain oil
below 14,000 feet; very few below 20,000 feet. “Deepdrilling will not change this picture very much,” because
the scarcity of oil deeper down is caused by greatertemperature, not to too few deep tests.12
Only one conclusion is possible: Hubbert was right.
The supply of conventional oil – and of all hydrocarbons– is fixed and finite. It can’t increase.
Ominously, demand for this fixed resource has
steadily increased. World oil consumption has grown at
about 2 percent annually for 30 years. In 1990-2000,
world crude oil output rose from 60 million barrels a day(mbd), or 21.9 Gb/yr, to almost 70 mbd (25.6 Gb/yr), andis now 75-76 mbd, which comes to about 27 Gb/yr.
American consumption rose from 17 mbd (6.2 Gb/yr) to19.5 mbd (7.1 Gb/yr). America extracts about 6 mbd andimports the rest. Campbell estimates total historicalconsumption of 873 Gb of conventional oil by end-2001.13
As immigration bloats Western countries’ populations andthe Third World industrializes and acquires millions ofvehicles, demand will rise.
But as University of Colorado physicist Albert
Bartlett’s excellent “Forgotten Fundamental of theEnergy Crisis” explains, exponential (steady-rate) growth
in a finite environment is unsustainable. Steady annual
consumption growth of 2 percent implies, taking today’s
27 Gb as the base figure, that 267 more Gb of oil will begone by 2011 – for cumulative consumption of 1,140 Gb,
over half the total supply even by optimistic estimates –and that in 35 years annual consumption will double to 54
Gb.
A collision is coming, then, between rising demandand falling annual supply. Conventional oil is not running
out – roughly half the initial quantity will remain after
output peaks – but it will be increasingly expensive.

278

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Permanently.
Moreover, there are no easy escapes. Explorationand enhanced recovery technologies have already
improved greatly, Deffeyes notes, and “there is little
expectation” of a dramatic breakthrough. The South
China Sea is the only potential province still unexplored.
Whereas annual world oil discovery averaged 43.8 Gb in
the 1960s, it is down to perhaps 10 Gb now. As of 2000,
Campbell observed, we were consuming oil four times as
fast as we were finding it. Even if, which is unlikely,
more large oil fields are found, Bartlett noted – and hismath is irrefutable – that given exponential consumption
growth, “a doubling of the remaining resource results inonly a small increase” in its life expectancy. Bartlett’s
recent mathematical analysis of oil production calculated
that if the estimated ultimate oil supply were doubled
from 2,000 Gb to 4,000, it would only delay the peak 26
years, from 2004 to 2030!14

but the number of wells that can produce oil, and how
much, “is not known or measurable at present andprobably never will be.”16 Simon again confuses theindefinite and the infinite. Moreover, by now geologists
do pretty much know where oil is – and isn’t – and how
much there is.
Even if we could know this global quantity, Simon
continued, we would still have to measure the possible oilyield from shale oil and tar sands – and, beyond that,from coal and organic crops (e.g., soybean oils) – and,beyond that, energy from nuclear power, our sun, andpossibly still other suns.17 The supply of oranges is “nonfinite,” then, because we can conceivably convert
lemons, apples, watermelons, coconuts and other water“Bartlett’s recent
mathematical analysis of oil

Debunking the Cornucopians
All this is devastating for the cornucopian school.
Julian Simon argued that natural resources are “not finite
in any economic sense,” and are infinitely substitutable.
Our ultimate resource is human ingenuity. An infinite
number of points can fit on a one-inch line segment,“because they have no defined size.” Therefore their
number is not finite. “Similarly, the quantity of copper thatwill ever be available to us is not finite, because there isno method (even in principle) of making an appropriate
count of it,” due to, for example, the possibility of making
copper out of other materials. “Hence resources are not‘finite’ in any meaningful sense.”15This is a farrago of absurdities. Points have no size,
but copper and oil molecules do; drawing quantitative
parallels between them is nonsense. And just because wecannot definitively measure something, that it is non-finite
is a non sequitur. I cannot feasiblely count how often
the letter “e” appears in the books on my desktop
shelves, but the number of books, and their contents, arefixed; therefore “e” necessarily appears in finite quantity.
Analogously, since only a finite quantity of source rock isor has been in the oil window, conventional oil must be
finite. Making meaningful amounts of one element intoanother with atom smashers would be fantasticallycostly.
Simon breezily asserted that “our energy supply is
non-finite, and oil is an important example.” A given
well’s productive potential may be measured and limited,

production calculated that if
the estimated ultimate oil
supply were doubled from
2,000 Gb to 4,000, it would
only delay the peak 26 years,
from 2004 to 2030!”

balloons into oranges. As if science is magic. Moreover,Simon egregiously telescoped into the present all possible
substitutions for conventional oil, from the currently
feasible to the remotely possible to the wildly fanciful(apparently with no awareness of the difference), someof which cannot be achieved in relevant quantities for
decades or centuries, if at all. At any given time, feasible
substitution is limited, so is the quantity of substitutes, so
is their yield of oil.
Tellingly, Simon’s famous books – The Ultimate
Resource (1981), The Resourceful Earth (1985), The
State of Humanity (1995) – ignored Hubbert. Much ofwhat cornucopians did say about oil is embarrassingly
counterfactual. Interviewed by William F. Buckley,
Simon asserted that “we in fact grow oil in Illinois,” and“copper and oil come out of our minds. That’s really
where they are.”18 No, Mr. Simon, they’re in the ground,279

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and oil doesn’t come out of our minds, it comes out ofsource rocks, and therefore can’t be “grown” like wheat.
William Brown’s “The Outlook for Future
Petroleum Supplies,” in The Resourceful Earth, asserted
that new technologies were “opening up vast new regionswith great potential,” such as jungles, polar regions, andoffshore areas. 19 In fact, worldwide discovery has
collapsed.
“Another promising region,” Brown added, is deeper
depths of existing petroleum areas. “That is, foreconomic reasons over 95 percent of the existing basins
have not been explored below 15,000 feet.” Higher
prices give incentives to drill deeper, and while it is too
soon to say what the potential of deeper deposits is,“[t]here is little doubt that they will be significant. Thereis a reasonable chance that they will prove to be
astonishingly productive” due to new technology. By
2100, Brown believed, almost all petroleum resources up
to 40,000 feet down, perhaps deeper, would be explored.
Similarly, in 1991 Simon trumpeted that we will “digdeeper and pump faster” and get more oil. 20
But going deeper would overshoot the “oil window.”
Drilling stopped at 15,000 feet for geological reasons, noteconomic ones: going deeper didn’t make sense, because
deeper down there generally wasn’t any oil. Petroleum
geologists already knew this. Hunt’s textbook, to repeat,
appeared in 1979. That Brown, and Simon himself, wereso crassly ignorant of well-established fac ts readily
available even in a previously published college textbook
is damning. The cornucopians did not know what they
were talking about.
Geologists would not have made these howlers, but
Brown was Director of Energy and TechnologicalStudies at the Hudson Institute; Simon was an economics
professor and Heritage Foundation adjunct scholar.
Cornucopians tend to be dwellers in a realm of words,
theories, and abstractions – not people in contact with therealities of a limited world. The latter, such as Campbell,
Deffeyes, and Ivanhoe, do not parrot Simonesqueplatitudes. They know better. That the closer one gets toreality and hard science the fewer cornucopians one
finds is telling.
In The Economics of Petroleum Supply, economist
Morris Adelman flatly asserted that “Minerals are
essentially inexhaustible. Oil, gas, coal, and copper … will
never be depleted. Investment in exploration anddevelopment creates an in-ground inventory of proved

reserves, constantly used up and replaced.” Adelman’s
The Genie Out of the Bottle proclaimed, “Reserves are
renewable and constantly renewed, if – and only if –there is enough inducement to invest in creating them.
The inducement depends on price and cost.” And: “Oil isa renewable resource.”21 Constantly replaced out of
what? Renewable how? A higher price gives incentives
to find more already-existing oil, but cannot “create”
fresh reserves by giving source rocks “inducement” toenter the oil window.

“Drilling stopped at 15,000
feet for geological reasons,not economic ones:
going deeper didn’t makesense, because deeper down
there generally wasn’t
any oil.”

Similarly, USGS geologist Peter McCabe analogized
oil reserves to a grocery warehouse “constantly being
replenished with baked beans from canned food
manufacturers.”2 2 Food canneries exist; oil factories donot. Where do the new reserves (“baked beans”) keep
coming from, if, as McCabe admitted (see below), fossil
fuels are finite? An Easter Egg hunt is a better analogy;
as the kids search longer, harder, and smarter, they findmore eggs – but they can’t find more than Mom’s basket
held to start with.
Adelman and Michael Lynch argued that seeing
resources as fixed is unduly pessimistic. Estimates offalling reserves and production “are incurably wrong
because they treat as a quantity what is really a dynamic
process driven by growing knowledge.” Knowing thelimit to oil reserves and output requires knowing futurescience and technology, which is impossible. 23
Simonesque confusion of indefinite and infinite. And thefacts of oil formation necessarily mean a ceiling on
discovery.
Other cornucopians, such as Robert Bradley,
president of the Institute for Energy Research (andEnron’s Director of Public Policy Analysis) regurgitate280

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earlier optimism, assert abundance, and ignore contraryevidence. Bradley’s “The Increasing Sustainability ofConventional Energy,” written for the Cato Institute, aleading libertarian think tank, cites Adelman and Lynch,
invokes “human ingenuity,” and asserts that the 19921996 period’s 40 percent drop in costs for finding oil in
America “is perhaps the best indicator that oil is growing
more abundant, not scarcer.”24 This non sequitur (costmay be dropping because exploratory technology isgetting more powerful) cannot be squared with the wellknown collapse of American oil discovery, which Bradley
ignores.
A hint that cornucopians inhabit an alternative wishbased reality is their citation of physicist Thomas Golds’
theory of a “deep, hot biosphere” in which oil is
produced, from which it rises, implying abundant
undiscovered oil. 2 5 If this is so, why has world oil
discovery collapsed since the 1960s? More to the point,
will new oil from the “deep, hot biosphere” arrive quickly
and abundantly enough to avert a painful crisis? Oil
which won’t be accessible for another thousand years
does not exist for all practical purposes.

Flawed Cornucopian Attacks
on Hubbert
When cornucopians do engage Hubbert, they often
misrepresent him or raise false issues. Witness thefollowing examples.
Trying to make Hubbert look gloomy, Adelman and
Lynch cite him selectively. They present his 1974
estimate of the U.S. oil supply of 170Gb – then note that
as of 1997 production was already 170 Gb, with proved
reserves of another 20 million barrels, with 2 Gb added
annually, and that the USGS’s current estimate was 250
Gb. But his prediction of the 1970 peak assumed a 200
Gb supply, which they ignore. Likewise, they present only
his 1,250 Gb estimate of world supply and cite the USGS
estimate of 2,400 Gb – ignoring Hubbert’s otherestimates of 2,000 Gb. 26 This is too dishonest to takeseriously.
McCabe characterizes Hubbert as believing that
“resources are finite,” as if this is a defect – but admitted
that “in the long run the supply of fossil fuel is finite,” and“The amount of fossil fuel … of course, is finite.” Hemisrepresents Hubbert as “regard[ing] Ohio’s oil
resources as virtually exhausted,” when his 1956 paper
said no such thing.27
Cornucopians belabor the bell-shaped curve. “Thereis no inherent reason” why a given fossil fuel’s
production plot “should have a symmetrical bell-shaped
curve,” McCabe intones. The University of Oklahoma’s
David Deming adds that “there is no unique Hubbert
curve,” but that Hubbert himself apparently exclusively
used symmetrical curves.28 Much ado about nothing,since, as these writers admit, Hubbert said production
plots could have more than one maximum and an infinityof possible shapes. Worse, this is a red herring,
conveying an impression that Hubbert stands or falls on
production plots following a bell-shaped curve. Hubbert’s
essential points were that a fossil fuel’s supply is fixedand finite, therefore exponential growth in extraction isunsustainable, extraction must eventually decline andcease, and total extraction cannot exceed initial quantity.
The curve’s shape is unimportant.
Deming claims that Hubbert’s 1956 paper “madewhat he considered to be a ‘best’ estimate” of total U.S.
crude oil supply – 150 Gb. As for predicted peak dates,“The actual peak occurred in 1970. Hubbert’s best
estimate (1956) of peak production in 1965 was in error
by five years, with the actual production peak occurringat the outer limit of his uncertainty range.” The claim of
Hubbert’s adherents that he was right “is only true if
Hubbert’s (1956) upper curve … is used, and Hubbert’s
actual prediction of 1965 is ignored.”29 This is flat
dishonesty. I have read Hubbert’s paper, and nowhere
did he describe the 150 Gb estimate as his “best,” or call1965 his “actual” prediction or “best estimate,” or give it
more weight than 1970.
Deming notes that Hubbert “was intimately involved
with technocracy,” which envisioned a “highly
authoritarian” ideal society, and that authoritarian
governments – Nazi Germany, the Soviet Union,
Communist China – were mass murderers. Hubbert’s
politics “appear to have been dangerously wrong.”
Deming wonders if they “may have influenced hisscientific conclusions” regarding oil. 30 A shameful smear
by association.

The Chimera of Alternatives
But the cornucopian trump card is that we cansubstitute unconventional hydrocarbons (shale oil, heavy
oil, tar sands, etc.) for conventional oil if oil priceincreases make it economically viable. We could evenextract carbon and hydrogen from the air and fabricatehydrocarbons. “The only realistic limitation … is price,”argues Maurice Dessault of the University of Waterloo281

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in Ontario.31
Uncannily, like the shipwrecked economist assuming
a can opener in order to open the can of food,cornucopians assume that technology will make thisfeasible. This is just Micawber-like profession of faith:something will turn up. What if it doesn’t?
More importantly, the price argument overlooks thephysics. Processing unconventionals is energy-costly. If
processing consumes more energy than it yields, it is aloser; price is relevant.
Shale oil could yield trillions of barrels. But
extraction is forbiddingly tough. Oil shale is kerogencontaining rock – source rock which has not been in theoil window. It requires not only mining, but processing:
replicating, in telescoped time, what happens in the oil
window, by crushing the rock and heating it to 900
degrees Fahrenheit, liquefying the kerogen – which must
be processed into oil by adding hydrogen, then refined.
Resultant waste requires disposal. Net energy yield is atbest slightly positive. “It is doubtful that shale oil can everplay a significant role in replacing world oil supplies, if it
can replace them at all,” geologist Walter Youngquist
concludes. “Shale oil cannot possibly make the UnitedStates energy self-sufficient in terms of liquid fuel.”32
Extracting heavy oil requires heat (often steam or
hot water) and solvents. On average, one oil barrel’sworth of energy must be expended to get two barrels ofheavy oil. Extracting oil from tar sands is underway in
Canada, but requires much heat, currently supplied bynatural gas, an average of one thousand cubic feet of gas
required per barrel of tar sand oil. 33 With present
extraction technologies, these alternatives are notpromising.
Heavy oil deposits along Venezuela’s Orinoco river
have been processed into an oil-water emulsion(“orimulsion”) for powering electric generating plants.
New methods are in use to extract the heavy oil andrefine it into crude, and from crude into fuels. Canadiantar sands now yield 250,000 barrels as day, expected to
double by 2007. Over 200,000 barrels flow daily from the
Orinoco; this is expected to triple by 2006. “Gas-toliquids” conversion of natural gas to liquid fuels may yielda million barrels by 2020. Campbell estimates thatcombined Canadian and Venezuelan output of tar sandsand heavy oil will be 2.8 mbd in 2005, 3.6 mbd in 20120,
and 4.6 mbd in 2020 – or 1.0, 1.3, and 1.7 Gb/yr,
respectively.34 These are drops in the bucket, given

today’s consumption of 75 mbd, and higher demands inthe future. Absent crash programs to boost output, andtechnological breakthroughs, these sources will not helpmuch.
As for making ethanol from corn, after examining
the process and factoring in all its energy costs, including
those entailed by growing corn, Cornell University
agricultural science professor David Pimentel concluded
that a gallon of corn-based ethanol costs about 71
percent more energy than it contains, making ethanol aloser. 35 Ethanol partisans, including the National Corn
Growers Association, retort that Pimentel recycles olddata and ignores recent technical progress.36 But even if
he is too pessimistic, significantly replacing oil withethanol would require colossal expansion of corn
cultivation, massively depleting water and topsoil, andcompeting with other land use, such as housing ourimmigration-swollen population.
Natural gas is abundant, and can partly substitute foroil. But natural gas too is finite, and its output too will
eventually peak and decline; Campbell and Laherrère
project world output peaking in 2020.37
Wind, nuclear, and solar power cannot replace oil as
input for petrochemicals – plastics, pharmaceuticals, tires,asphalt, fertilizers, etc. They are only limited energy
substitutes: aircraft, trains, tractor-trailer rigs, farmmachinery, and construction equipment cannot use wind,nukes, solar panels, or batteries. Many vehicles and othermachines integral to our way of life simply must haveliquid fuel.
The claim that a pric e will solve any problem or
remove any shortage if it simply gets high enough reflects
two related, fundamental impieties in modern man: thathuman ingenuity can escape the limits of the humancondition and of reality, and that demand creates supply.
In short, you can get your way if you want it badly
enough. Clap your hands, and your servant Reality will
come running. This is what makes Julian Simon’s glib,
fatuous blather so dangerous. One of the most pernicious
manifestations of man’s perennial rebellion against
creaturehood, the cornucopian school tells impious
modern man what he most wants to hear: limits do notexist, you can get something for nothing, desires trump
reality, don’t worry, be happy.
But man is not God and reality cannot, will not,infinitely accommodate him, never mind price or
blustering about human ingenuity. If rocks contain no oil,282

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they will yield no oil; if an aquifer is drained, it will
yield no water; if processing an alternative source takes
more energy than it yields, it is senseless – no matter
how high prices get. Prices convey information. They do
not work magic. In anything grounded in physical reality,
science, not economics, has the last word.
Clearly, the cornucopian school is an intellectual
opium den. There are limits on human possibilities, andwe are about to collide with them.

Connecting the Dots:The Grim Consequences
This collision will be painful. All economic activity
requires energy, and roughly 40 percent of the world’s
primary energy demand is met by oil. 38 Petroleum
underlies just about everything we do. No other energy
source can match conventional oil for versatility,
portability, ease of storage, net energy yield, and so on.
Cheap conventional oil is one of the primary factors
making our affluent, comfortable modern way of life
possible. It follows that when oil is no longer cheap, ourway of life will be disrupted to the point of
unsustainability.
The drying-up of cheap conventional oil will do forthe modern economy what a long drought does for
agriculture. One obvious consequence will be a persistent
replication of the “stagflation” – simultaneous inflation
and recession – which followed the 1973-1974 oilembargo. Real wages and labor productivity will stagnate
or even decline. Since producing and transporting all
production inputs takes energy, much of it fossil fuel,costlier oil will make them costlier too, meaning that an
investment dollar will not buy as much productivity
growth as it could before.
Meanwhile, by a gruesome coincidence, right aroundthe time oil peaks, the Baby Boomers will start flooding
Social Security and Medicare beneficiary rolls. So just as
the largest generation in American history begins retiring(the oldest Boomers will be 65 in 2010), the cheap oilbottom will start dropping out of the economy which will
have to support them. The inflationary recession largely
caused by the 1973-1974 oil crisis precipitated the first
financial crisis in Social Security’s history, as higher-thananticipated inflation drove inflation-adjusted benefit
outlays up and unemployment shrank Social Security’s
tax base. This time the oil shock will be permanent.
The Congressional Budget Office projects thatspending for Social Security, Medicare, and Medicaid,

which provide old-age and elderly health care benefits,
will rise from 7.8 percent of GDP in 2001 to 14.7 percent
by 2030. Assuming federal revenues remain roughly 20
percent of GDP, and entitlement programs areunchanged, the General Accounting Office forecasts thatby 2030 federal outlays will be roughly 28 percent of
GDP and Social Security, Medicare, Medicaid andinterest on the debt will take 75 percent of revenues. By
2050, outlays will be almost 40 percent of GDP, andrevenues will cover only half of them, making the budget
deficit some 20 percent of GDP.39
These frightening calculations reflect only an aging
population, and ignore cheap oil’s demise. Moreover, allforecasts by Social Security’s and Medicare’s actuaries,
including the pessimistic ones, assume steady long-term
growth in real wages, productivity, and GDP. Obviously,
an economy crippled by higher inflation, soaring energy
costs, rising unemployment, and stagnant productivity
cannot carry these burdens. The oil crunch, then, will
disastrously worsen the coming fiscal crisis ofentitlements. It therefore greatly strengthens the case forrigorous means testing to cut entitlement costs. It also
kills Social Security privatization, a severe, prolonged
bear market in stocks being a likely consequence of apersistent and worsening energy squeeze.
The effects will be grimmest in agriculture. As
cornucopians always brag, modern agriculture isfantastically more productive than traditional farming.
What they overlook is that it gives hostages tohydrocarbons. As Bartlett aptly put it, “Modern
agriculture is the use of land to convert petroleum into
food.” In 1999, according to the U.S. Department ofAgriculture’s Economic Research Service, energy costs
accounted for 24-31 percent of the total variable cost forfield crops (e.g., corn, wheat). Not only does modern
agriculture use fossil fuels for machinery, transportation,
groundwater pumping and irrigation, it depends heavily on
fertilizers, which are made by reacting natural gas withnitrogen. Since natural gas accounts for 75-90 percent of
the cost of nitrogen fertilizers, rising natural gas prices
w ill devastate the fertilizer industry; fertilizer producers
could not cover costs by the end of 2000 due to high gas
prices.40
With natural gas substituting for oil, demand will be
increasing for a supply which will be falling after about2020. This means steadily rising gas, fertilizer, and foodprices, and dwindling crop yields in nations which must283

T HE S OCIAL C ONTRACT

Summer 2002

import natural gas, fuels and fertilizers, and which cannot
afford the squeeze. North Korea’s recent famine is awarning of modern petroleum-based agriculture’svulnerability to breakdown if hydrocarbon inputs
disappear; when fuel and fertilizer supplies collapsed, so
did agriculture; three million North Koreans starved todeath.41
Moreover, costlier energy will exacerbate ouralready-worsening water problems by making it costlier
to purify and recycle contaminated water and to drill for,pump, and transport ground water.
The coming oil crunch makes curtailment of mass
immigration an urgent imperative. Mass migration fromThird World countries with low per-capita energy use toaffluent nations with high per-capita energy use mustnecessarily increase total energy demand. Surging
immigration, the main contributor to America’s population
growth, will greatly increase demand for costlier energy.
In 1973-1995, American energy consumption rose some
22 percent, some roughly 90 percent of it due topopulation growth.42 It is well known that immigrationaccounts for some 70 percent of population growth since
the Seventies. This means immigration accounts for thelion’s share of the increase in energy use – roughly 63
percent (.9 x .7 = .63). It necessarily follows that wecannot tackle energy without tackling immigration. This
is not nativism, this is arithmetic.
California’s energy crisis is grimly instructive as towhat continued mass immigration means. As Ric
Oberlink observed, California’s total energy consumption
more than doubled in 1969-1999, even though per-capita
use grew only 22.9 percent (from 5,655 kilowatt-hours to
6,952). The reason? California’s population rose from
19.7 million to 33.1 million (up 68 percent), some 95
percent of it due to immigration.43
Not only will mass immigration worsen the oil
problem, most immigrants have no human capital to offer
to help cope with it. In fact, immigration will make coping
disastrously harder. Floods of immigrant labor will
exacerbate productivity and wage stagnation, thereby
worsening economic stagnation, making it harder toafford costlier energy, goods, services, and entitlements– and harder to finance the urgently needed hugeinvestments in alternative energy sources, meaning ourenergy plight will worsen. Should hydrocarbon inputs for
agriculture decline, yields on already-heavily worked
c roplands, depleted of natural nutrients, will fall, forcing

us to bring more land under cultivation – which will
collide with the urban sprawl due to immigration-driven
population growth. Mass immigration and the decline ofconventional oil, then, will create a vicious circle, each
one worsening the problems spawned by the other.
Colin Campbell warns that America “has tosomehow find a way to cut its demand [for oil] by atleast five percent a year.”4 4 This will be impossible
without a complete moratorium on immigration, for atleast two decades, to see us through the transition fromcheap oil to a sustainable mix of substitutes. We cannot
simultaneously cut demand for oil while allowing the main
force driving it higher to keep operating. The longer mass
immigration continues, the more per capita energy use
must fall to compensate – meaning the more austere andimpoverished our lives must become. Put another way,continued mass immigration in a context of declining
conventional oil output will rapidly turn America into an
impoverished nation with Third World living standards.
Obviously, we must promptly develop alternatives toconventional oil and natural gas. But equally obviously,
we must take measures promptly to conserve energy.
And an immigration moratorium is at the top of the list. •NOTES
1. Kenneth S. Deffeyes, Hubbert’s Peak: The Impending
World Oil Shortage (Princeton, NJ: Princeton University
Press, 2001), p. 158.
2. M. King Hubbert, “Energy from Fossil Fuels,” Science,
vol. 109, no. 2823 (February 4, 1949), p. 105, 106, 107, 108, 109.
3. Ibid., pp. 106, 107, 108, 109.
4. M. King Hubbert, “Nuclear Energy and the Fossil Fuels, in
American Petroleum Institute, Drilling and Production
Practice, 1956 volume, pp. 11, 12-13, 17.
5. Ibid., pp, 18, 19.
6. M. King Hubbert, Energy Resources: A Report to theCommittee on Natural Resources of the National Academyof Sciences – National Research Council (Washington:
National Academy of Sciences – National Research Council,
1962), pp. 72-73, 75; M. King Hubbert, “The World’s
Evolving Energy System, American Journal of Physics, vol.
49, no. 11 (November 1981), pp. 1024-1025.
7. L. F. Ivanhoe, “King Hubbert – Updated,” Hubbert Center
Newsletter, no. 97/l1, p. 3. Article originally published as L.
F. Ivanhoe, “Updated Hubbert curves analyze world oil
supply,” World Oil, November 1996, pp. 91-94.
8. Colin J. Campbell and Jean Laherré, “The End of Cheap
Oil,” Scientific American, March 1998, pp. 78-83.

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Summer 2002
9. C. J. Campbell, “Peak Oil: Presentation and the Technical
University of Clausthal,” December 2000, printout,
http://www.oilcrisis.com; C. J. Campbell, “Oil Depletion –Updated Through 2001,” printout, http://www.oilcrisis.com.
10. Association for the Study of Peak Oil & the Oil Depletion
Analysis Centre [hereafter, ASPO-ODAC] Newsletter, no. 14(February 2002), p.11.
11. Deffeyes, Hubbert’s Peak, pp. 8, 21-27, 51-64.
12. John M. Hunt, Petroleum Geochemistry and Geology(San Francisco: W. H. Freeman and Co., 1979), pp. 131, 143,
358.
13. Two percent annual demand growth: ASPO-ODAC
Newsletter, no. 9 (September 2001), p. 5; 1990, 2000 figures:
Carl E. Behrens, Energy in 2001: Crisis Again? Updated July
31, 2001, Congressional Research Service, Report # RL31049,
p. 5; current U.S. figures: “New Sources: As Oil Supplies
Grow, U.S. is Less Reliant on the Middle East,” Wall Street
Journal, March 15, 2002; Campbell’s 2001 estimate: ASPOODAC Newsletter, no. 13 (January 2002), p. 8.
14. Deffeyes, Hubbert’s Peak, pp. 8-10, 105-108; ASPOODAC Newsletter, no. 15 (March 2002) p. 9; C. J. Campbell,“Peak Oil: Presentation at the Technical University ofClausthal,” pp. 9, 11, http://www.oilcrisis.com; Albert A.
Bartlett, “Forgotten fundamentals of the energy crisis,”
American Journal of Physics, vol. 46, no. 9 (September1978), p. 879; Albert A. Bartlett, “An Analysis of U.S. andWorld Oil Production Patterns Using Hubbert-Style Curves,”
Mathematical Geology, vol. 32, no. 1 (January 2000), p. 10.
15. Julian L. Simon, The Ultimate Resource (Princeton, NJ;
Princeton University Press, 1981), pp. 5-6, 38-39, 47.
16. Ibid., p. 49.
17. Ibid.
18. “Answer to Malthus? Julian Simon Interviewed byWilliam Buckley, Population and Development Review, vol.
8, no. 1 (March 1982), pp. 206-207
19. William M. Brown “The Outlook for Future Petroleum
Supplies,” in Julian L. Simon and Herman Kahn, eds., The
Resourceful Earth: A Response to Global 2000 (Oxford and
New York: Basil Blackwell, 1985), p. 370.
20. Brown, “The Outlook for Future Petroleum Supplies,” inSimon and Kahn, eds., The Resourceful Earth, p. 370; Julian
Simon, “Energy Supply Scaremongers,” Washington Times,
February 5, 1991, quoted in Lindsey Grant, “TheCornucopian Fallacies,” (1992) http://dieoff:org, p. 5
21. M. A. Adelman, The Economics of Petroleum Supply:
Papers by M. A. Adelman (Cambridge, MA and London:
MIT Press, 1993), p. 538; M. A. Adelman, The Genie out of
the Bottle: World Oil since 1970 (Cambridge, MA and
London: MIT press, 1995), pp. 11, 34.

22. Peter McCabe, “Energy Resources – Cornucopia orEmpty Barrel?” American Association of Petroleum
Geologists Bulletin, vol. 81, no. 11 (November 1998), p.
23. M. A. Adelman and Michael C. Lynch, “Fixed View ofResource Limits Creates Undue Pessimism,” Oil and Gas
Journal, April 7, 1997, p. 56/
24. Robert L. Bradley, Jr. “The Increasing Sustainability ofConventional Energy,” Policy Analysis no. 341, April 22,
1999, Cato Institute, p. 6.
25. See, e.g., Robert L. Bradley, Jr., “The Sustainable – andYoung n Hydrocarbon Energy Age,” Ideas on Liberty,
November 2001, p. 21; Alan Caruba, “The World Has MoreOil, Not Less,” May 12, 2002, National Anxiety Center,
http://www.anxietycenter.com.
26. Adelman and Lynch, “Fixed View of Resource Limits
Creates Undue Pessimism,” p. 56.
27. McCabe, “Energy Resources – Cornucopia or Empty
Barrel?,” p. 2121, 2111, 2113, 2112 figure 14 caption (compare
Hubbert, “Nuclear Energy and the Fossil Fuels,” p. 12.
28. McCabe, “Energy Resources – Cornucopia or Empty
Barrel?,” p. 2131; David Deming, “Oil: Are We Running
Out?,” paper presented at Second Wallace E. Pratt Memorial
Conference, January 2000, p. 9.
29. Deming, “Oil: Are We Running Out?,” pp, 9, 10.
30. Ibid., pp. 12-13.
See, e.g., Maurice B. Desseault, “Flawed reasoning about oil
and gas,” Nature, vol. 386 (March 6, 1997), p. 12; McCabe,“Energy Resources – Cornucopia or Empty Barrel?,” pp.
2115, 2117.
32. Walter Youngquist, “Shale Oil – The Elusive Energy,”
Hubbert Center Newsletter, no. 98/4; Walter Youngquist,
GeoDestinies: The Inevitable Control of Earth Resources
Over Nations and Individuals (Portland, OR: National Book
Company, 1997), pp. 219-222.
33. Joseph P. Riva, “Is the World’s Oil Barrel Half Full or Half
Empty?” Hubbert Center Newsletter, no. 99/2, p. 4; L. F.
Ivanhoe, “Canada’s Future Oil Production,” Hubbert Center
Newsletter, no. 2002/2, p.2.
34. “New Sources: As Oil Supplies Grow, U.S. Is Less Reliant
on the Middle East,” Wall Street Journal, March 15, 2002;
ASPO-ODAC Newsletter no. 15 (March 2002), p. 11.
35. David Pimentel, “Energy and Dollar Costs of Ethanol
Production with Corn,” Hubbert Center Newsletter, no. 98/2.
Others have come to the same conclusion. Youngquist,
GeoDestinies, pp. 242-243.
36. See, e.g., National Corn Growers Association, “NCGA
Refutes Claims of Energy Imbalance of Ethanol,”
http://www.ncga.com; Hosein Shapouri, James Duffield,
Michael Wang, “The Energy Balance of CornEthanol285

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Summer 2002
Revisited,” paper presented at 7th Annual National Ethanol
Conference, February 27-March 1, 2002.
37. R. W. Bentley, “Global Oil & Gas Depletion: An
Overview,” Energy Policy, 30 (2002), pp. 189, 190.
38. Joseph R. Riva, “World Oil Production After 2000:
Business As Usual or Crises?” August 18, 1995,
Congressional Research Service, Report # xxx, p. 1.
39. Congressional Budget Office, The Budget and Economic
Outlook: Fiscal Years 2003-2012, p. 102; General
Accounting Office, Budget Issues: Long-Term Fiscal
Challenges, Testimony, David M. Walker, Comptroller
General of the United States, Senate Budget Committee,
February 27, 2002, pp. 7-8.

newsletter of the Association for the Study of Peak Oil & the
Oil Depletion Analysis Centre, edited by Colin J. Campbell(co-author of “The End of Cheap Oil”).
www.energiekrise.de
A German site which makes its materials available inboth German and English. (To convert German language
materials to English, click “English” on the bar at the top of
the home page).
www.runningonempty.org
This is a useful survey of the situation with basic facts,
figures.

40. Bartlett, “Forgotten Fundamentals of the Energy Crisis,”p. 880; Jerry Heykoop, Energy Costs and Agriculture, April
24, 2001, Congressional Research Service, Report # RL30943,
pp. 1-3.
41. Tony Boys, “Causes and Lessons of the ‘North Korean
Food Crisis’,” 2000, http://www.net-ibaraki.ne.jp.
42. Leon Kolankiewicz, “Immigration, Population, and the
New Census Bureau Projections,” Center for Immigration
Studies, Backgrounder, June 2000, p. 5.
43. Ric Oberlink, “Too Many People, Too Little Power,” TheSocial Contract, vol. XI, no. 4 (Summer 2001)pp. 265-267.
44. Colin J. Campbell, “Peak Oil: A Turning Point for
Mankind,” Hubbert Center Newsletter, no. 2001/2-1, p. 3.
RECOMMENDED WEB SITES ON THE OIL CRISIS
www.oilcrisis.com(www.energycrisis.com, www.hubbertpeak.com)
Best English language site. Arguing from a Hubbertperspective, it includes news, editorials, information on
natural gas and alternative sources, information on Hubbertand his theory, some key works by Hubbert, and articles,
reviews, and analyses by experts such as Professor Albert
A. Bartlett, Colin J. Campbell, L. F. “Buss” Ivanhoe,
Deffeyes, Jean Laherrère, and Walter Youngquist. Clicking“Ivanhoe” accesses the M. King Hubbert Center for
Petroleum Studies, a unit of the Colorado School of Mines,
which Ivanhoe coordinates. This gives access to thecomplete set of issues of the concise but highly informative
Hubbert Center Newsletter, published quarterly since 1996.
hubbert.mines.edu
This is the internet address for the Hubbert Center, incase you want to go there directly rather than throughoilcrisis.com.
www.isv.uu.se
Detailed coverage of May 2002 International Workshop
on Oil Depletion, Uppsala University, Uppsala Sweden, andbeginning with the January 2002 issue, the excellent

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