Thursday, October 25, 2012
WHAT EVER HAPPENED TO PEAK OIL?
In 1956 M. King Hubbert predicted that the U.S. production of oil would peak between 1965 and 1971:
He was right! The decline occurred as predicted, except something unusual happened. Look to the right, and you see an actual increase. Is this but an anomalous blip? Apparently not, but Hubbert's base only used conventional petroleum.
The reality today is that there are now other forms of oil, plus biofuels, as shown above. While that drop to 5 million barrels per day did, in fact, happen to crude oil, the current U. S. Energy Information Agency data shows that the U.S. is now producing "oil" at 10.9 million barrels per day (MBPD), just under Saudi Arabia at 11.6 MBPD. Russia is at 10.3 MBPD, but #4, China, drops to 4.3 MBPD. More so, CitiBank predicts American production reaching 13-15 MBPD by 2020. It was only 2002 when the U.S. was the #1 petroleum producer. Will we become #1 again? Likely, but how often have those oil prognosticators been wrong? I'll answer this. Every time!!!
So are we now exporting oil? Well, no, for we use 18.7 MBPD, which means that the amount of imports has decreased:
What is dangerous is that our dependence dropped to 3 MBPD in the mid'80s, but jumped to nearly 10 MBPD during the time of the great recession in 2008. The economic collapse compounded by increased domestic drilling has at least reversed the balance. Yet, we are still importing a lot of oil and paying $300 billion/year for this privilege. Fortunately, our consumption of oil has significantly decreased (one MBPD = 2.12 quadrillion Btu per year):
So what happened to Peak Oil? The parameters changed. Further, the Chicago Mercantile Exchange has oil at $85/barrel in December of 2020. Oil cheaper than today in the Year 2020? Who really believes this?
Are the smirking oil companies right and we don't ever need to be concerned about running out of petroleum? Of course not, but we have been given a reprieve, and should be thankful. Keep in mind that oil has hovered around $100/barrel for several years now and prices remain scarily metastable:
Just wait till Israel drops bombs on Iran or the government of Pakistan (with more than a hundred nuclear weapon--Israel has more) falls to terrorists. The year 2013 will be monumental. The implications on the economy frighten me.