Revisiting peak oil theory : role of demand and technology

• Main Authors: Bai, Jie Ying, Neo, Debby Yi Wei, Chin, Janice Huijia
• Other Authors: Chang Youngho
• Format: Final Year Project
• Language: English
• Published: 2014
• Subjects: DRNTU::Social sciences::Economic theory
• Online Access: http://hdl.handle.net/10356/59311
• Institution: Nanyang Technological University

Many studies have tried to validate Hubbert’s peak oil theory, some of which supporting it and otherwise. This study supports the argument that the theory is valid to a certain extent; however, it holds assumptions that are not true in today’s world. This study aims to revisit the peak oil theory incorporating the role of demand and technological progress. A simple mathematical model is constructed with constant demand, with three extended versions incorporating demand and technological progress. The model presents how long supply can last and the movement of the peak. A higher demand appears to shorten the duration of how long supply can last, causing a narrower peak oil curve with its peak being reached earlier when compared to the Hubbert’s peak. The advancement of technology appears to prolong the supply and cause a broader peak oil curve and a later peak. With both a change in demand and advancement in technology, the change in curve depends on the magnitude of rate of demand change and the rate of technology. When the rate of demand change is greater than the rate of technology, it will result in a narrower peak oil curve with its peak reached earlier as compared to the Hubbert’s peak and vice versa.