Not only millions of lay-citizens, but also many scholars and academics have taken the bait and fallen right into this trap by arguing that recent U.S. wars of choice are driven primarily by oil and other “scarce” resources. More broadly, they argue that most wars of the future, like the recent and/or present ones, will be driven by conflicts over natural resources, especially energy and water—hence, for example, the title of Michael T. Klare’s popular book, Resource Wars [4].
As a number of critics have pointed out, this is reminiscent of Thomas R. Malthus’s theory of “scarcity” and “overpopulation.” Malthus (1766-1834), a self-styled British economist, argued that the woes and vagaries of capitalism such as poverty, inequality and unemployment are largely to be blamed on the poor and the unemployed, since they produce too many mouths to be fed, or too many hands to be employed.
In a similar fashion, Peak Oil implies that current crisis in energy (and other commodities) markets is to be blamed, at least in part, on less-developed or relatively poorer nations such as India and China for growing “too fast” and creating “too much” demand on “scarce” resources.
Peak Oil theory is not altogether new. M. King Hubbert, a well-known geologist, provided a dramatic discussion of the theory in 1956. A year later, Admiral Rickover discussed the end of the fossil fuel era even more emphatically—at the time, he gave oil about fifty more years to run out. Thirty years ago, the Club of Rome predicted an end of oil long before the present day.
Indeed, there is evidence that projections of oil peaking, then declining and running out, have been floated around ever since oil was discovered in the second half of 19th century. For example, the chief geologist of Pennsylvania predicted in 1874 that we would run out of oil in four years—just using it for kerosene [5].
While Peak Oil theory has been around for a long time, it has usually been dormant during “normal” economic times, or “reasonable” oil prices, but has gained heightened currency during periods of energy crisis and high oil prices. For example, Peak Oil became quite popular during (and immediately after) all of the three recent oil crises: the early 1970s crisis, the late 1970s and early 1980s crisis, and the early 1990s crisis.
The obvious reason for the rise in the Peak Oil popularity in the context of those periods of energy crisis was the perception that oil shortage must have played a major role in the respective oil price hikes. It is not surprising, then, that as recent geopolitical convulsions in the Middle East have triggered a new round of oil price hikes, Peak Oil theory has once again become fashionable.
It turns out, however, that oil price shocks of all the previous periods of energy crisis were precipitated not by oil shortages, or any real prospects of oil “peaking and running out,” but by international political convulsions, revolutions and wars: the Arab-Israeli war of 1973, the 1979 Revolution in Iran, and the 1990-91 invasion of Kuwait by Saddam Hussein’s armed forces. Each time, as the turbulent period of war or revolutionary atmosphere ended, higher oil prices of the respective crisis situation subsided accordingly [6].
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