International Review of Environmental and Resource Economics > Vol 1 > Issue 4

Peak Oil in a Carbon Constrained World

Timothy J. Considine, Department of Energy and Mineral Engineering, The Pennsylvania State University, USA, , Maurice Dalton, Graduate Research Assistant, Tufts University, USA,
Suggested Citation
Timothy J. Considine and Maurice Dalton (2008), "Peak Oil in a Carbon Constrained World", International Review of Environmental and Resource Economics: Vol. 1: No. 4, pp 327-365.

Publication Date: 28 Feb 2008
© 2008 Timothy J. Considine and Maurice Dalton
Environmental Economics
Peak oilCarbonUnconventional oil


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In this article:
1 Introduction 
2 The Peak Oil Debate 
3 Oil Price Trends 
4 World Oil Production 
5 Predicting Peak Oil 
6 Reserve Growth 
7 Assessing World Oil Reserves 
8 Unconventional Oil 
9 Non-Fossil Fuel Resource Technologies 
10 Conclusions 


The world petroleum complex has been on a treadmill, struggling to add increments of new production to keep pace with growing demand and depletion. If the oil price shock of 1979–1981 is considered an aberration due to panic inventory building, recent real oil prices are at levels not seen since the 19th century. The analysis in this review shows that geophysical models of peak oil predict a pre-mature peaking in world oil production and a decline rate more rapid than the average 3% annual rate of decline observed in countries past peak production. This review also finds that political decisions and events play an important role in determining world oil production and that reserve additions respond to expected prices and costs. The actions of the world oil cartel, the business cycle, and the delayed response of oil demand and supply to prices indicate that the peak of conventional oil production will only be known until well after it has occurred. Despite rapid advances in output from Brazil and West Africa, crude oil production outside OPEC and Russia appears to have peaked in 2002, at least for now. Another tangible indicator of a coming peak is the expansion of unconventional oil production, which is on a collision course with efforts to curb greenhouse gas emissions. A clear policy direction for carbon regulation that encourages technological innovation is imperative as peak oil approaches.