Is Peak Oil A Myth?

Ronald Bailey has a good piece in Reason which argues that peak oil is largely mythical – similar predictions have been made for years, and the supply of petroleum hasn’t seem to have peaked quite yet.

For instance, peak oil theorists argue that the Saudis are systematically lying about the capacity of their oilfields, and that the technique of injecting pressurized water into the reservoirs is producing less and less oil as time goes on. However, Bailey notes that the Saudis are spending $100 billion on enhancing their oil capacity over the next few years. That isn’t the action of someone who knows the end is nigh for Saudi crude. Likewise, we’re finding significant new deposits of oil all the time – most recently near Mexico. We can’t estimate when peak oil will hit if we don’t even know how much oil we really have. Proven reserves could be as high as 2 trillion barrels – enough to last for at least a generation with today’s technology.

Efficiency also plays a factor " we do more with a barrel of crude now than we did 20 years ago. Today’s “gas-guzzling” SUV gets the mileage of an efficiency car in the 1970s. There are practical limits to efficiency, but there’s little evidence we’re brushing up against those limits. If anything, as hybrid vehicle technology benefits from increased economies of scale, our consumption of gasoline will likely slow compared to today’s rates of growth. Projections assuming today’s technology persisting into the future are almost certain to be significantly off.

That doesn’t mean we shouldn’t be investigating alternative fuel sources, or conserving fuel as much as possible. What it does mean is that the fear mongers need to be treated with a grain of salt. The worries of “peak oil” have been around for decades, and there’s little solid evidence that supports that contention. What we need to do is continue to increase energy efficiency across the board and allow the market to decide what fuel source works best to replace our dependence on fossil fuels.