In 1956, M. King Hubbert, a geoscientist working at the Shell research lab in Houston, presented a paper at a meeting of the American Petroleum Institute (API), predicting that oil production in the United States would “peak” sometime between the late 1960s and early 1970s.
According to Hubbert’s theory, half of all the recoverable petroleum under U.S. territory would be depleted within a decade or so, rendering the remaining half much harder to extract and, accordingly, much more expensive to acquire.
And with no new economically viable fields capable of producing the black gold on which our economy depends, the domestic oil industry would decline and diminish, either leaving us at the mercy of foreign producers or forcing us to embrace a new age of alternative power supplies with which to fuel our modern civilization. Hubbert was a fan of both solar and nuclear energy.
Hubbert’s work coined the phrase “peak oil” and delivered the industry’s first big doomsday prediction. Naturally, his work was ridiculed.
Over time, though, his forecasts were accepted as conventional wisdom. In some respects, they were the impetus for accelerated research and development by scientists, environmentalists and entrepreneurs as they raced to find substitute forms of energy.
That is, until now.
Domestic Oil Production Increases
In 2012, U.S. oil production grew more than in any year since 1859 , when Edwin Drake sank the country’s first commercial oil well in Titusville, Pa. Domestic daily crude output last year, according to API, averaged 6.4 million barrels a day. That’s a record hike of 779,000 barrels from 2011.
What’s more, the U.S. Energy Information Administration predicts average daily production will grow by another 900,000 barrels a day in 2013.
So Hubbert was wrong. We weren’t at peak oil in the 1970s, and we’re not at peak oil now. We’re at peak oil production.
Good for the Economy, Bad for the Planet
How was Hubbert wrong? It turns out he did not fathom new technologies like horizontal drilling and hydraulic fracturing — “fracking ” — that unlock oil and natural gas deposits stuck in formations that previously were inaccessible.
The news is both good and bad, depending on your point of view.
The revival of drilling in oil regions such as West Texas’ Permian basin and the nascent production in the Bakken shale region of North Dakota means more jobs for more American workers. And the replacement of dirty coal with cleaner natural gas makes domestic electricity production a tad more environmentally amenable. (Although we still mine coal at the same pace — we just use less of it at home and export more of it abroad.)
But the long-term prognosis is likely (and overwhelmingly) negative, because the “good” news could mean that the nation might turn away from more vigorous efforts to replace carbon fuels with non-polluting, renewable energy. Especially now that we’ve discovered a treasure trove of our favorite source of power — one that portends to make America the world’s largest oil producer within a decade.
We’re like heroin addicts who just found a giant free bag of it on the street. We’ll enjoy the high while it lasts. We’ll lord it over our equally hooked neighbors. But in the long run, it’s going to kill us.
Long-Term Costs Mount
How bad can it be?
If you think that Superstorm Sandy was an aberration, you haven’t been paying attention to the science of climate change. Up till now, global warming, largely the result of mankind’s use of fossil fuels, warmed the planet by about 0.8 degrees Celsius, enough to trigger storms like Sandy and a drastic reduction of the polar ice cap.
Most scientists believe that an increase of 2 degrees C. is the most the planet can accommodate without sustaining sea level increases that will wipe out coastal cities and cause droughts that will destroy the farmland on which millions depend for their food supply. Giant hurricanes will ravage innumerable communities and wildfires will consume millions of acres of parched forests.
Consider the findings of the 2012 edition of the World Energy Outlook, which reports the continued increase in our planet’s consumption of fossil fuels will result in “a long-term average global temperature increase of 3.6 degrees C.” Yes, nearly twice what climatologists tell us is the maximum sustainable level.
And so our ability to boost oil production, feeding ours and the world’s insatiable appetite for dirty energy, ensures ever higher levels of carbon emissions, which will continue to accelerate global warming, which will finally cause the very destruction of the world that the discovery of inexpensive oil has allowed us to create in the first place.
So today the oil and gas are cheap.
Tomorrow we will pay a steep price.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].