Probing Question: Is peak oil a myth?

Unprecedented summer gasoline prices are squeezing Americans’ wallets and also expanding their vocabularies, as terms like “peak oil” gain common usage.

Peak oil, economists say, is the point at which oil production maxes out: The easily available reserves are gone, and the cost of extracting and refining the remaining stuff exceeds the price it fetches on the open market. After the peak, the theory goes, production starts to fall.

Experts worry that if such a decline in production happens too rapidly, it could outpace the development of viable energy alternatives, resulting in a drastic spike in prices. Others believe that peak oil is a myth, that we could never drain the world’s oil supply to the point of such a crisis.


Tim Considine, a former professor of natural resource economics at Penn State, falls somewhere in the middle.

“In any geographic area, it’s a natural phenomenon for oil to peak at some point,” Considine said. He pointed to the United States reaching its own oil peak in 1971. From the late 19th century until that year, the United States was the world’s largest producer of crude oil, he noted. But in 1971, U.S. oil production peaked at 10 million barrels per day, and it has been dropping ever since, to a current level of 5 million barrels per day. “The peak oil theory looks at the U.S. experience and believes the world will peak also,” explained Considine. “The biggest question is when.”

Some economists predict the peak has already occurred; Princeton’s Kenneth Deffeyes says it happened in 2005. Other experts, like Matthew Simmons, chairman of Simmons & Co. International, an energy investment company, estimate that the world is peaking right now. Exxon Mobil and other oil companies have projected a peak at 2030 or beyond.

PhysOrg