Peak oil / by kevin murray

I believe in peak oil as written and described by M. King Hubbert, Ph.D., the esteemed geologist in 1956.  According to his 2nd scenario Hubbert believed that the USA would achieve its peak oil production in 1970, which it in fact did.  In 1970 according to the United States produced an average of 9,637,000 barrels per day.  Subsequently, this production amount has never been matched or bettered by the United States and realistically probably never will be.


Still, even forty years after peak oil, the USA and world at large somehow manages to find and extract enough oil globally to keep the world economy going.  The primary reason that this is so is the massive increase in the price of oil since 1956, the year, that Hubbert published his paper.  In 1956, according to the average price of a barrel of oil in the USA was $2.90.  In 2013, the average price of a barrel of oil in the USA is $87.67.  If you add inflation onto the $2.90 you would get a price in present-day dollars of approximately $24.16 that leaves us with a massive dollar increase of over 350% in a barrel of oil over the ensuing years--inflation adjusted.  While one can contribute this increase to several factors, the largest factor by far would be that the monetary cost of extracting a barrel of oil has gone up considerably.  This would indicate that it is technology, ingenuity, and scientific breakthroughs that have allowed us and other countries to produce the amount of oil that we need over the ensuing years as opposed to any mistaken viewpoint that oil is plentiful and abundant.


In his book, Twilight in the Desert, Matthew R. Simmons states: "From 1930 onward, the United States had so much oil that state agencies in Texas and Oklahoma prorated output among all producers allowing each to produce oil for only a limited number of days each month.  These proration policies were established to prevent oil prices from dropping so low that the US oil industry would disintegrate.  Proration remained in place until the end of the 1960s."


Not only are those days, long gone, they will never in our lifetimes come back.  We need only go back one hundred years to recognize that oil has its definite peaks, as shown in Leviathan: the History of Whaling in America, author Eric Jay Dolan stated: "During 1847, its most productive year for oil production, the American whaling industry processed just over 430,000 barrels of sperm and whale oil combined."  Whale oil was supplanted by crude oil and the history of whale oil has been mainly forgotten by mankind.


Hubbert believed that the bell curve was applicable to USA oil production and the United States has followed the downward slope of that curve, although it must be said in the last couple of years, production of oil in the United States has gone up.  Again, that is mainly a function of price and also most definitely a function of necessity.


While our country uses many resources to keep its economy going, oil, in particular the access, the availability, and the extraction of oil is not only mandatory, but it is fundamental and absolutely critical to our livelihoods.  Globally, six out of the top seven companies in revenue, are in fact, oil and gas companies.