[This article by the ISSB e.V. already appeared in the "Freie Welt" on 7 July 2014. For topical reasons it is reprinted again].

In 1956, the geologist and oil expert M. K. Hubbert shocked the world. His insight: The global resources of fossil hydrocarbon raw materials such as oil, natural gas and coal are finite. His observation: After each discovery of a new oil field, production initially rises, then remains at a high level for a short time, before finally dropping irreversibly. The production maximum of an oil field is thus reached long before it is exhausted.

The reasons for this are as follows: At the beginning, the oil field has to be developed. This requires numerous test wells to estimate the extent. At the beginning, the pressure of the oil reservoir is at its highest. The oil shoots out of the ground and is easy to extract. Once the oil field is completely developed, production reaches its peak. Eventually, production drops. This is because the remaining oil can only be extracted with a high energy input.

According to the peak oil theory, a global oil production maximum will be reached at some point, namely when the majority of the oil wells have passed the peak. Then global oil production will drop. Peak oil" is often misunderstood. It does not mean that oil will be completely used up to the last drop in the near future. It merely means that after a certain point in time, it will no longer be possible to increase production or extraction.

For an industrial civilisation based on fossil resources, this means renouncing economic growth. For the booming economies of Asia are at least as hungry for energy and raw materials as Europe and North America. With a shortage of oil reserves and a drop in production volumes, it is only a matter of time before the economic system reacts. Peak oil" is followed with a time lag by the economic "tipping point". Then there is the threat of total collapse.

Oil production has already reached or exceeded the peak in many countries.

Some of the world's largest oil fields have already exceeded their production peak, probably even the famous Ghawar field in Saudi Arabia. Saudi Arabia and Russia are currently the largest oil producers in the world.

The problem with the peak diagnosis is that it can only be verified several years later. This is because it must first be clarified whether it is a matter of short-term fluctuations in production or the signs of a long-term decline. Another problem is the lack of transparency in energy policy. According to an OPEC rule, the maximum production per year must be in a certain ratio to the officially declared reserves. It is feared that individual states manipulate these figures and statistics to keep their annual production at a desired level.

Iraq and Iran most probably still have their production peak ahead of them. After Saudi Arabia, both countries have the largest oil reserves in the world. Therefore, the political situation in these countries is of international interest. Furthermore, countries such as Kazakhstan, Libya, Sudan, Azerbaijan, Qatar and Algeria are probably still about to reach their production peak. In contrast, many other countries have already reached or exceeded their production peak, including Syria (1995), Argentina (1998), Venezuela (1998), Australia (2000) or Oman (2001).

In Europe, "peak oil" had already been reached decades ago. Only the oil discoveries in the North Sea have provided a temporary respite. But even their days are numbered. Norway reached peak production in 2001, Great Britain in 1999. Germany had already exceeded peak production in the 1960s. Around two-thirds of Europe's oil needs have to be imported. The trend is rising. Even Great Britain has meanwhile turned from a net exporter into a net importer.

In the USA, the production peak of Texas oil, which is easy to extract, had already occurred in the 1970s. Recently, however, considerable increases in American oil production have been announced again. The reason for this is the production of the hard-to-reach oil, the exploration of which was not economically viable at the time. Extraction technologies have advanced. Controversial fracking has also played its part in the development. Meanwhile, North America is dreaming of "energy independence". The main reason for this euphoria is the huge oil sand fields of Alberta in western Canada. However, the rising costs of oil extraction and the lasting damage to the environment remain problematic.

When is oil production worthwhile?

Extracting oil is only worthwhile if the energy used to extract it is significantly less than the energy extracted. In short, if one tonne of oil has to be extracted in order to produce one hundred tonnes of oil, big business is the lure. That was the situation half a century ago. However, if you only get a little more energy in the form of oil for the energy expended, the profit margin becomes too small. The ventures then no longer pay off.

Newly discovered oil wells are rarely easy to exploit conventional oil fields. Nowadays, they are mostly in terrains that are difficult to access. For example, oil deposits have been discovered off the coast of Brazil. But to reach these deep-sea deposits, 2,000 metres of ocean depth have to be overcome and 4,000 metres of rock drilled through.

The disaster of the "Deepwater Horizon" oil platform in 2010 opened the world's eyes to how dangerous and costly it can be to tap oil deposits in the deep sea. 670,000 tonnes of crude oil had leaked at the time. Large parts of the Gulf of Mexico were polluted. Brazil also has experience with oil disasters. In 2001, two explosions occurred on the oil platform Petrobas-36. The platform tilted and sank in the 1.3 kilometre deep sea.

This time, companies like BP, Exxon and Chevron held back in the awarding of the production rights off the coast of Brazil. The contract was awarded to a consortium of Shell, Total, the Brazilian Petrobras and the Chinese companies CNPC and CNOOC.

Growing world trade is inconceivable without rising oil production

Kiwis from New Zealand? Beef steaks from Argentina? Computers from China? A holiday trip to the Caribbean? Globalisation is based on growing world trade. Rising crude oil prices would set limits to this development. Exports do not pay off if transport costs mask the price advantages of cheap production. A return to increased local production would be a logical consequence. However, this is only the harmless beginning.

Of much more concern is the fact that our economy is systemically dependent on growth. The economic growth of China, India and Southeast Asia alone is putting the world to the test. Energy and resource supplies will not be able to keep pace in the long run to meet economic and financial expectations.

The conflicts of the future will be resource wars

Until the 1970s, the 20th century was characterised by optimism about progress. Political and international conflicts were to a large extent ideological in nature. At that time, oil production was growing exponentially. In the eyes of the public, the raw material seemed to be infinite. In the future, however, raw material shortages and resource access will be the main factor for conflicts and wars. This context explains why, despite the end of the Cold War, global arms spending has increased significantly.

Note: The article was written in 2014, but the fundamental problems are still the same today: as resources become scarcer and their extraction more expensive and thus no longer profitable, the global economy lacks the basic materials for industry. Without them, economic growth collapses and with it the financial system based on pump-priming.