Peak oil, twenty years on: what the 2007 warnings got right and wrong

In 2007 and 2008 "peak oil" was not a fringe phrase. Oil prices were climbing to record highs, petrol station signs were being changed almost weekly, and a large online community of engineers, geologists and worried citizens was arguing that world oil production was about to reach its maximum and then fall for good. This web address was part of that conversation, with pages warning of a coming "post-oil" world and asking what a small, far-away country like New Zealand should do about it.

Nearly twenty years later, it is worth asking honestly: what did those warnings get right, what did they get wrong, and what should a household take from it now?

What peak oil actually claimed

The idea goes back to the geologist M. King Hubbert, who in 1956 used the pattern of past discoveries to predict that oil production in the lower 48 United States would peak somewhere between the mid-1960s and early 1970s. US output did peak in 1970, and the prediction made his name. The peak oil argument applied the same logic to the whole world: discoveries had peaked decades earlier, so production would have to follow.

By the mid-2000s, many people in the movement expected the global peak to arrive within a few years, followed by a long, painful decline. Some predicted economic collapse. Others, more modestly, argued that cheap oil was over and that societies should start planning for a world with less of it.

What they got right

Cheap, easy oil did run out. Analyses of conventional crude, the kind that flows from ordinary wells, suggest its production levelled off around the middle of the 2000s. Most of the growth since then has come from harder, costlier sources.

Price shocks hurt. The oil price spike of 2008 was real, and it fed into a painful period for households and economies around the world. The warning that oil dependence leaves countries exposed to sudden price changes has been proved right several times since.

Planning ahead is cheaper than reacting. The movement's practical advice, to use less oil, electrify where possible, and build towns that don't depend on long car trips, has aged well, even though the reasons people now give for it are usually about climate and cost rather than supply.

What they got wrong

The world did not run short. Global oil production kept rising. The biggest surprise was in the United States, where horizontal drilling and hydraulic fracturing opened up "tight oil" in shale rock. US output passed its old 1970 record in the late 2010s and has since gone higher still.

Price works in both directions. High prices did exactly what economists said they would: they made expensive oil worth producing, and they encouraged people to use less. Instead of a one-way slide, the 2010s brought price crashes as well as spikes.

The conversation flipped from supply to demand. The question most energy analysts now argue about is not when the world will be unable to produce more oil, but when it will stop wanting more. Agencies disagree on the date. The International Energy Agency has published scenarios in which demand levels off around the end of this decade, while others, including the oil producers' cartel OPEC, expect demand to keep growing for longer. Either way, the debate has moved from geology to policy, technology and consumer choice.

Where New Zealand stands in 2026

New Zealand's exposure to oil has, if anything, become more direct. The country's only refinery, at Marsden Point near Whangārei, stopped refining in 2022 and became a fuel import terminal. Every litre of petrol, diesel and jet fuel used here now arrives already refined, on ships.

Transport is where that matters most. Oil supplies almost all of the energy used by New Zealand transport, and transport is one of the largest slices of the country's energy use. MBIE's annual Energy in New Zealand report tracks these figures each year and is the best place to see the current numbers.

The good news is that New Zealand starts from an unusually strong position on electricity. Most of its power comes from renewable sources, mainly hydro, geothermal and wind. That makes shifting household energy from oil to electricity one of the most practical things a country like this can do.

What this means for a household

The 2007 peak oil pages urged readers to prepare. Two decades on, the useful version of that advice is less dramatic and more practical:

• Transport is the big lever. For a typical household, petrol or diesel is the largest oil use by far. An electric car charged at home, or a plug-in hybrid used mostly on battery, replaces imported fuel with locally generated electricity. See our guide to the energy section for how home charging fits with the grid.
• Heating has largely moved off oil already. Few New Zealand homes still burn oil for heat, but many still use gas or inefficient plug-in heaters. A heat pump is usually the cheapest way to get warmth from electricity, as our note on heat pumps explains.
• Efficiency first. Insulation, draught-stopping and good hot-water habits reduce the energy a home needs from any source. That advice was on the peak oil sites in 2007 and it is still the cheapest win.
• Don't panic-buy the future. The peak oil era produced a lot of overconfident predictions and a few exciting technologies that never arrived, the compressed-air car among them. Our explainer on how the compressed-air engine was meant to work looks at what happened there.

The honest verdict

Peak oil was wrong about timing and wrong about collapse. It was right that cheap oil would not last, that dependence on imported fuel is a vulnerability, and that the sensible response is to use less and electrify more. The irony is that the world is now taking most of that advice, mostly for different reasons.