Peak Oil?

Posted: April 3, 2014 in Uncategorized

Peak Oil has “peaked” a few times throughout history. Hubbert’s Peak Oil theory was a key idea that has sparked further concern about this issue. Since the dawn of oil as a powerful tool, there have 5 times (including the current situation) where people began arguing that oil was soon going to run out. What were those times?

The first time peak oil became prevalent was only 26 years after oil was first discovered as a way to power civilizations. In 1885 a Pennsylvania state geologist declared that oil was only a temporary resource and that very soon the world would be out. Not long after this, oil was discovered further west in the US and in time for the vehicle to start running off of oil. This first peak was false.

The second time was WWI and was because military started to use vehicles, such as tanks, which required a lot of oil. Because of this increase in demand, oil became expensive and people were asked to not purchase gasoline (rationing). President Wilson was on recored many times talking about how oil would soon be out of reach. However, once again, soon after oil supplies were booming because of new technologies and findings of oil.

WWII was the next peak oil experience for the same reasons as WWI. Interesting is the powerful incentive oil played in WWII and was a significant reason the Germany failed to succeed. Part of this great worry was because of the international market of oil and how WWII has ruined that market. Then the Middle East became a huge oil region and these fears subsided again and oil became widely available.

That gave way for the 4th time and was largely due to the OPEC Embargo. Oil consumption was booming and tensions were rising, and when OPEC embargoed the shipments, the world panicked. In respect to oil, the world believed that long term production was gone and we would have significantly less oil from now on. However, by the mid 80s, this was gone.

Oil prices dropped and it once again became available to everyone at pretty cheaps rates. Now much of the speculation that we have peaked is due to the large growth of developing countries and the belief that we have no chance at finding new oil.

However, the fact is that in 2011 we finished the year with more oil reserves than we started the year with. How is that? We are continuing to improve technology that makes previously unavailable oil, now available. This is providing a continued growth in reserves. Additionally, as the price does increase, so does the incentive to have more oil. So as companies continue to have incentive to drill, they will find ways to drill and produce more oil.

Now the issue of “peak cheap oil” may be realistic and thus a valid concern. It is possible that oil will continue to increase, and I believe that it will, because of the more expensive methods for extraction while demand is seeing rapid growth. But oil will not run out in the near future, but we will see a steady increase in prices and potential damage to the economy. Of course, unless we find ways to decrease demand. Enter electric cars, please.


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