RUNNING ON EMPTY? NOT YET
April 13, 2007
The theory that oil supplies have peaked and are on their way down has made more than a few Americans nervous. They should relax. A new study confirms that the market, if left alone, will provide for decades, says Investor's Business Daily.
Combating the peak oil theorists, Professors Eugene Gholz and Daryl Press say in a Cato Institute study that the world's ultimately recoverable resources have been growing over time.
With world consumption growing, how can recoverable reserves be growing? One reason is that many fields contain substantially more oil than was originally believed. Another factor is improved technology, say Gholz and Press:
- In 1980, they report, a mere 22 percent of the oil in the average field was recoverable.
- Today, better technology -- thanks to the market -- has boosted the recovery rate to 35 percent, an improvement of more than 50 percent.
- In addition, 35 years ago the life index of the world's oil reserves -- the length of time that known reserves could keep up with the current rate of production -- was 35 years.
- By 2003, after 31 years of accelerating oil extraction, the life index was 40 years.
"No one knows how much oil is ultimately recoverable from the earth, but there is no compelling evidence that reserves are running out or that production is near the peak," say Gholz and Press.
Source: Editorial, "Running On Empty? Not Yet" Investor's Business Daily, April 12, 2007; based upon: Eugene Gholz and Daryl G. Press, "Energy Alarmism: The Myths That Make Americans Worry about Oil," Cato Institute, Policy Analysis No. 589April 5, 2007.
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