Why We Will Never Run Out of Oil
June 5, 2012
The notion that world oil production had reached its summit and would soon begin a decline -- bringing with it shortages, economic collapse, resource wars and general ruination -- was in vogue not so long ago. Referred to as "peak oil," this momentous point in history has been invoked numerous times over the past few decades as a mark of inevitable civilizational decline, says A. Barton Hinkle, a columnist at the Richmond Times-Dispatch.
Reliable media outlets have lent credence to the belief: according to reports by the BBC, New York Times and Houston Chronicle, we very well should be on the downslope of oil production right now. However, current production trends and trade patterns suggest this is far from the truth.
"Peak oil" and general fears about the depletion of "recoverable reserves" mislead the public insofar as they fail to account for the role of human ingenuity. That is to say, they ignore the roles of technological advancements and market forces in expanding production options and increasing reserves.
The contributions of both technology and economics can be seen in the current oil boom taking place in North Dakota:
- The high gasoline prices over the last decade encouraged producers to seek out new sources of oil that were previously prohibitively expensive to exploit.
- This provided impetus for drilling in the Bakken and Three Forks fields -- enormous domestic supplies that are relatively more expensive to take advantage of.
- Moreover, technological advancements in horizontal drilling and hydraulic fracturing opened the fields up to production and gave rise to the state's boom.
- This allowed the state to become the number two domestic producer in only the last six years.
Furthermore, this same phenomenon can be seen on a global scale: market pressure and innovation in production allow for evermore sources of oil.
- Production has risen strikingly fast in places such as the tar sands of Alberta, Canada -- a source that was not previously viable.
- Oil producers are also seeking new deposits in South America (Colombia and Brazil), and especially in the Amazon.
- They are also expanding offshore discovery ventures, looking specifically into a potentially huge field off the northeast shoulder of the South American continent.
Source: A. Barton Hinkle, "Why We'll Never Run Out of Oil," Reason Magazine, June 1, 2012.
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