Friday, October 29, 2010

Why the Peak in Peak Oil is a Myth

Many of those who have energy investments will no doubt have an opinion on peak oil. For those not familiar with the theory, here is a brief outline of the premises that the peak oil crowd put forward. First, the world has a finite amount of oil and we have consumed approximately 2/5ths of that know resource. Further to this they believe peak oil can be represented as a bell cure, of which once we have reached the maximum petroleum extraction rate we will enter an era of sharp production decline. They also believe that we are getting close to this peak in worldwide production and that even with flat demand the price for crude oil will continue to rise.

Since I typically question conventional wisdom, I often asked myself the following questions? Who says peak oil is a bell curve, and how do we know that we have used 2/5ths of a known resource? These things are spoken as if they are matter of fact. Are we close to the maximum possible production rate? Perhaps I could offer some competing ideas that will rock the boat.

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