Paradigm Shift: End of the Oil Age

Energy Aware

The world thinks it’s in an energy crisis today and indeed there are shortages in some places but the world is undergoing an energy crisis more fundamental than the simple shortage happening today in Europe. A shortage can be remedied.

The larger problem is that oil use began to decline from 48% of total world energy consumption after 1977 (Figure 1). This was the beginning of the end of the oil age.

Figure 1. The end of the oil age began with the price shocks of the 1970s. Oil consumption has fallen from 48% to 36% of total energy use since 1977. Source: EIA, BLS & Labyrinth Consulting Services, Inc.

Per-capita oil consumption has been flat since since 1985 (Figure 2). That means that individual worker productivity is not growing as it did before the oil shocks.

Figure 2. World per-capita oil consumption reached a peak in 1978 and has been on an undulating plateau since 1985. Source: EIA,FRED, OWID, BP & Labyrinth Consulting Services.

The world thinks that an energy transition is underway but fails to understand that transitions are additive. The relative percent of fuels changes but volumes rarely decrease. The world uses, for example, as much biomass today as in 1800 (Figure 3). Nor is there any likelihood that this transition will take 30 years instead of the century or longer period for earlier transitions.

Figure 3. Energy transitions are additive. The relative percent of fuels changes but volumes rarely decrease. The world uses as much biomass today as in 1800. Source: EIA, BP, IEA, FRED, OWWD, World Bank & Labyrinth Consulting Services, Inc

The real crisis today is that oil is the economy. The oil age has been ending for 50 years but there is no substitute for oil. Wind, solar and nuclear only address electric power generation which accounts for only 18% of world energy consumption. Even if we could magically transform 100% of electric power to non-fossil energy sources, this would not address the other 82% of energy use that society needs.

The medium- to long-term should be increasingly affected by limited supply growth (Figure 4). The market will send price signals to producers based on its sense of medium-term supply urgency. Prices will rally until inflation and a fragile economy end the rally. This is the dialectic that I expect will dominate oil markets in 2022 and probably beyond. There is great opportunity for those who understand this pattern.

Figure 4. World oil production is unlikely to regain November 2018 peak of 102 mmb/d. Source: EIA STEO, EIA AEO 2022 & Labyrinth Consulting Services, Inc.

These themes are playing against a backdrop of massive global debt load and the imaginary recovery from the economic closures of 2020 and 2021.

Price formation in oil markets is all about supply and inventories are part of supply. Old-paradigm analysts believe that oil demand must revert to ever-higher levels which supply simply cannot meet. In fact, the opposite is true. The correct oil paradigm is supply-driven and price-constrained.

Art Berman is anything but your run-of-the-mill energy consultant. With a résumé boasting over 40 years as a petroleum geologist, he’s here to annihilate your preconceived notions and rearm you with unfiltered, data-backed takes on energy and its colossal role in the world's economic pulse. Learn more about Art here.

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  1. Rfnrybizweenie on April 6, 2023 at 1:16 am

    We heard the same thing in 2005-2010 and it didn’t work out that way. Look at The Oil Drum shutting down.

    Now, this is NOT to say oil is easy to find or that there are not supply issues. I agree actually. Especially in non OPEC (which determines price).

    However, this is an old fight that we’ve had. Look at the 70s, 80s, 2010s, etc. I wouldn’t blithely assume that you can take the latest trend and extrapolate.

    There’s a lot of failed peak oil predictions in the rear view mirror. Doesn’t mean it won’t eventually happen. But I’m pretty skeptical of the people who have predicted peak oil and failed, time after time. And not learned to be a bit more humble.

  2. Robert Sczech on December 5, 2022 at 4:07 am

    There are two factors which the article does not address. First, the growing world population contributes to the pressure on resources. A decrease in the world population would ease the transition. Secondly, there is a huge potential in reducing inefficiencies when using any type of resources including oil. Our attitude as consumers of energy is the attitude of entitlement to a certain energy consumption. One example is space heating and cooling. By insulating our houses radically, perhaps 50% of the energy could be saved. Too many trips by car serve no meaningful purpose. Using a bicycle is still not an option for most people. Oil is mostly used for transportation. There are just too many cars on the road especially during rush hours. If we are going to run out of oil eventually, and if there is no viable alternative for oil in the long term, then the rational response is to stretch the remaining resources by drastically transforming the nature of our economies. Today, our economy is geared towards garbage production with little effort given to recycling, reusing, repairing etc. People lived happily hundreds of years ago with no oil consumption. Perhaps we should learn from the past generations.

  3. Energy Shock! - Art Berman on September 6, 2022 at 12:08 pm

    […] world has begun the descending arc of the Oil Age. Europe’s energy crisis, the war in Ukraine, and escalation of U.S. – Chinese tensions over […]

  4. Ravi Uppal on August 17, 2022 at 12:11 pm

    I am a fan ,so nothing to add .

  5. El mar on August 17, 2022 at 7:04 am

    Great post, thank you!
    “There is great opportunity for those who understand this pattern.”

    Please explain: What is this opportunity?

    Thanks and best regards
    el mar

    • art.berman on August 17, 2022 at 10:17 am

      El Mar,

      Subscribe to my newsletter and you will find that explanation.

      All the best,


    • art.berman on August 17, 2022 at 10:17 am

      Thanks for your comments, Gary.



  6. Llewellyn James on August 17, 2022 at 12:53 am

    What will be the ultimate result of the end of the oil age?

    • art.berman on August 17, 2022 at 10:16 am


      As I said in the post, “That means that individual worker productivity is not growing as it did before the oil shocks.”

      Subscribe to my newsletter and you will get much deeper understanding through more in-depth analysis.

      This is from my latest newsletter:

      “The real crisis today is the economic expression of the reality that energy is the economy. As living standards fall, mass immigration and civil unrest will probably increase. The oil age has been ending for 50 years and there is no substitute.”

      All the best,


  7. Gary McMurtry on August 16, 2022 at 10:55 pm

    This situation or predicament is the Price Wedge that’s been discussed off and on. Prices cannot be too high for consumers or they cut back and the economy slows. Prices too low for producers means they cut back and supply-driven prices rise. In the background, the oil supplies are geologically constrained. Technology and debt promises can only stretch the supplies so far. Great perspective, Art.


  9. shane rice on August 15, 2022 at 7:13 pm

    Enlightening! thanks

    • art.berman on August 16, 2022 at 9:37 pm

      Thanks for your comment.

      All the best,


    • art.berman on August 16, 2022 at 9:38 pm

      Glad you enjoyed the post.



      • Fast Eddy on August 17, 2022 at 10:03 pm

        ‘There is great opportunity for those who understand this pattern.’

        What’s the great opportunity? From the looks of the situation we are staring total collapse of the global economy in the face – and there is no way to escape.

        • art.berman on August 22, 2022 at 7:20 pm

          Subscribe to my newsletter and you will understand.

          All the best,


  10. Jonathan Vides on August 15, 2022 at 5:15 pm

    Thank you, Art!

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