Demise of Peak Oil Theory

"For at least a hundred years, people have repeatedly warned that the world is running out of oil. In 1920, the US Geological Survey estimated that the world contained only 60 billion barrels of recoverable oil. But to date we have produced more than 1000 billion barrels and currently have more than 1500 billion barrels in reserve. World petroleum reserves are at an all-time high. The world is awash in a glut of oil. Conventional oil resources are currently estimated to be in the neighborhood of ten trillion barrels. The resource base is growing faster than production can deplete it.
"In addition to conventional oil, the US has huge amounts of unconventional oil resources that remain untouched. The western US alone has 2000 billion barrels of oil in the form of oil shales. At a current consumption rate of 7 billion barrels a year, that's a 286-year supply."

Demise of Peak Oil Theory
by David Deming

Peak Oil is the theory that the production history of petroleum follows a symmetrical bell-shaped curve. Once the curve peaks, decline is inevitable. The theory is commonly invoked to justify the development of alternative energy sources that are allegedly renewable and sustainable.

Peak Oil theory was originated by American geologist M. King Hubbert. In 1956 Hubbert predicted that US oil production would peak between 1965 and 1970. When production peaked in 1970, it was interpreted as proof that Hubbert's model was correct and that US oil production had entered a period of inexorable and irreversible decline. Unanswered was the question of whether or not US production had declined simply because it had become cheaper to purchase imported oil.

Peak Oil is a theory based upon assumptions. Like other scientific theories, it is subject to empirical corroboration or falsification. Although Hubbert correctly predicted the timing of peak US oil production, several of his other predictions based on Peak Oil theory were wrong.

Hubbert predicted that the maximum possible US oil production by 2011 would be one billion barrels. But actual production in 2011 was two billion barrels. Hubbert predicted that annual world oil production would peak in the year 2000 at 12.5 billion barrels. It didn't. World oil production in 2011 was 26.5 billion barrels and continues to increase. Hubbert was grossly wrong about natural gas production. In 1956 he predicted that by 2010 US annual gas production would be 4 TCF. But in 2010, US wells produced more than 26 TCF of gas.

The flaw of Peak Oil theory is that it assumes the amount of a resource is a static number determined solely by geological factors. But the size of a exploitable resource also depends upon price and technology. These factors are very difficult to predict.

The US oil industry began in 1859 when Colonel Edwin Drake hired blacksmith Billy Smith to drill a 69-foot-deep well. Subsequent technological advances have opened up resources beyond the limits of our ancestors' imaginations. We can drill offshore in water up to eight-thousand feet deep. We have enhanced recovery techniques, horizontal drilling, and four-dimensional seismic imaging. Oklahoma oilman Harold Hamm is turning North Dakota into Saudi Arabia by utilizing hydraulic fracturing technology. US oil production has reversed its forty-year long decline. By the year 2020, it is anticipated that the US will be the world's top oil producer.

For at least a hundred years, people have repeatedly warned that the world is running out of oil. In 1920, the US Geological Survey estimated that the world contained only 60 billion barrels of recoverable oil. But to date we have produced more than 1000 billion barrels and currently have more than 1500 billion barrels in reserve. World petroleum reserves are at an all-time high. The world is awash in a glut of oil. Conventional oil resources are currently estimated to be in the neighborhood of ten trillion barrels. The resource base is growing faster than production can deplete it.

In addition to conventional oil, the US has huge amounts of unconventional oil resources that remain untouched. The western US alone has 2000 billion barrels of oil in the form of oil shales. At a current consumption rate of 7 billion barrels a year, that's a 286-year supply.

Nine years ago, I predicted that "the age of petroleum has only just begun." I was right. The Peak Oil theorists, the malthusians, and the environmentalists were all wrong. They have been proven wrong, over and over again, for decades. A tabulation of every failed prediction of resource exhaustion would fill a library.

Sustainability is a chimera. No energy source has been, or ever will be, sustainable. In the eleventh century, Europeans anticipated the industrial revolution by transforming their society from dependence on human and animal power to water power. In the eighteenth century, water power was superseded by steam engines fired by burning wood. Coal replaced wood, and oil and gas have now largely supplanted coal. In the far distant future we will probably utilize some type of nuclear power. But for at least the next hundred years, oil will remain our primary energy source because it is abundant, inexpensive, and reliable.

Petroleum is the lifeblood of our industrial economy. The US economy will remain stagnant and depressed until we begin to aggressively develop our native energy resources. As Harold Hamm has said, "we can do this." What's stopping us is not geology, but ignorance and bad public policy.

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