Peak Oil

The Peak Oil Scare began with M. K. Hubbert, a Shell geologist from 1943 to 1964. His theory was that at some point the maximum world production would reached, after which its rate would terminally decline. He first presented his theory in 1949 when he predicted US production would peak around 1970. He was largely right for the wrong reasons. In fact Shell, Mobil, Texaco et al flooded the US market Middle East imports, at prices so low that many Texas domestic producers could not compete and had to shutter their operations. Hubbert also predicted a worldwide peak of “light sweet” around 2000. However he went on to say (in comments which have been largely ignored by the hysterics) that this did not mean that the industrial world will soon become destitute of oil and gaseous fuels, because these can be produced from other fossil fuels such as tar sands, heavy and extra-heavy oils, and shale, which occur in much greater abundance. CERA stated recently that the global resource base of conventional and unconventional oils is around 5 trillion and likely to grow. It argues further that “peak oil” reasoning is faulty and tends to distort critical policy and investment decisions and cloud the debate over the energy future. Each generation has its hysterics who claim we are running out of oil. Each time technology and the opening of new frontier areas has banished the specter of decline. There’s no reason to think that technology is finished this time.


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