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20-Sep-2011 | kate | Doug Allan, the president of Retire First, passed along an article to me today referring works written in the Wall Street Journal this weekend by Dr. Daniel Yergin. Dr. Yergin’s article was written to debate the theory of Peak Oil. Peak Oil, is a concept that emerged from geologist M. King Herbert in 1956 to predict when the maximum amount of oil would be extracted and we would be forced into a period of oil production decline. Peak Oil basis is developed off of the fact that the worlds resources are based on a finite supply, and eventually the world will run out of reserves.
Dr. Yergin argues that Peak Oil is far away as we currently replace every barrel of oil extracted with 1.6 barrels of new reserves each year. New reserves are considered oil that was not known in the previous year’s calculations.
While the US peaked in oil discovery back in 1970 (as identified by the Energy Information Agency), worldwide the energy industry is consistently adding proven reserves to the numbers each year. For example back when Herbert predict peak oil, the industry was producing about 12 million barrel of crude per day, with the US production peaking at 13 million per day in 1970, with total worldwide production hitting 60 million per day in the same year. In 2010, total worldwide production reached 90 million per day, with the US producing just 10 million barrels per day.
Dr. Yergin closed his article with an interesting fact, since the start of producing oil in the middle of the 19th century, the world has produced 1 trillion barrels of crude oil and todays current proven reserves are 1.4 trillion barrels of oil that are currently technologically and economically accessible. Dr. Yergin also believe that there is an additional 5 trillion barrels of oil yet to be found, holding peak oil claims off for another couple decades at least if not longer.
