PEAK OILERS' ERROR
February 2, 2007
Peak oil advocates argue that we are at or rapidly approaching the beginning of a long decline in oil production, having reached the "peak" of oil resources. Combined with the increase in oil use, some in the peak oil community are predicting dramatic consequences, says the Washington Policy Center (WPC).
These predictions, however, don't match the facts, says WPC:
- At each point when environmental activists have claimed that the downturn was just around the corner, world oil reserves defied predictions and continued to increase.
- The reason is simple -- as oil exploration technology improves, previously unusable or undiscovered resources are found.
- According to the Energy Information Administration, proven world crude oil reserves have risen from 645 billion barrels in 1980, to 1,002 billion barrels in 1990 and to 1,317 billion barrels today.
However, even if the peak oilers were right, the solution lies not in government programs, but in the market:
- If the supply of oil does decline, the market will adjust; prices will go up and consumers will change.
- In fact, Americans responded to rising gas prices during the second and third quarters of 2006 by cutting back on the nearly $0.50 increase between March and August -- as prices declined, drivers began to drive again.
- Overall, those who warn of resource underestimate the ability of markets to improve technology efficiency and change demand patterns.
Further, peak oilers and other environmental activists who warn of resource depletion usually call on the government to take actions to avert the upcoming crisis. When the government spends money trying to solve non-existent problems, it takes resources away from real problems and increases skepticism about real environmental problems on which we should focus, says WPC.
Source: "Seattle Peak Oilers, World To End Soon - And This Time We Mean It," Washington Policy Center, January 2007.
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