“Hubbert’s Peak,” says U.S. energy historian Daniel Yergin, “is still not in sight.” This is true: Global oil production is still on the rise with no evident decline any time in this century. We should take a moment to acknowledge this fact. It’s not only that resurgent oil and gas reserves have abruptly extended the world supply of fossil energy for another 100 years. It’s that market economics has again triumphed over the Luddite left, that democracy has prevailed again over “Technocracy” – the ideology, memorably captured in 1984, that George Orwell once described as “a prerequisite for fascism.”
Mr. Yergin calls it a “historic shift” – recalling the time before the Second World War “when the United States and its neighbours ... were the world’s main source of oil.” To some degree, he told The New York Times, “we’re going to see a new rebalancing, with the Western Hemisphere moving back to self-sufficiency.”
Marion King Hubbert was the controversial American scientist who predicted in the 1940s that U.S. oil production would reach its peak between 1965 and 1970, and that production would then begin an irreversible decline. As it happened, U.S. oil production did appear to peak in 1970 – turning Mr. Hubbert into an End Times prophet, as his followers saw it, of an approaching industrial “peak oil” apocalypse.
As Mr. Yergin documents in his new book ( The Quest: Energy, Security and the Remaking of the Modern World), Mr. Hubbert got everything wrong – as End Times prophets are wont to do. U.S. oil production did not, in fact, peak at 1.5 million barrels a day. By 2010, U.S. production was 3.5 times higher than Mr. Hubbert had anticipated: 5.5 million barrels a day. Children born in 1965 have not lived to see all of the world’s oil consumed in their lifetime, as he predicted. The world did not enter a period of “non-growth.”
But then, the Technocracy movement repudiates market prices and the voluntary exchange of goods and services. Dedicated to the eradication of democracy and capitalism, Technocracy (from the Greek tekhne, meaning skill, and kratos, meaning power) championed government by omniscient scientists. It espouses a no-growth, no-money economy. Mr. Hubbert was himself a high-ranked Technocrat – an elite Technocrat who, in the ultimate irony, never understood the importance of technological advances in averting “peak oil.”
Mr. Yergin foresees not a finite peak but a never-ending plateau. He anticipates further increases in U.S. production of oil – noting that production has increased by more than 10 per cent in the past three years. He expects U.S. oil imports will keep dropping. In 2008, the U.S. imported 60 per cent of the oil it consumed; in 2010, 47 per cent. Meanwhile, the U.S. is just beginning to exploit its vast shale oil reserves. North Dakota oil production, now 400,000 barrels a day, will increase to two million barrels a day by 2020.
U.S. oil production will continue to increase through 2050 when, Mr. Yergin says, it will level off, then begin a slow decline – not because oil will be scarce but because increases in efficiency will reduce the absolute amount of oil that the global economy needs.
In the meantime, the global fossil fuel rush will proceed at a more rapid rate. Venezuela probably has greater oil reserves than Saudi Arabia; these reserves await the demise of President Hugo Chavez. Brazil probably has greater reserves than Saudi Arabia, too. According to some analysts, Israel has shale oil reserves almost comparable to Saudi reserves.
Mexico has huge reserves; as with Venezuela, these reserves await efficient exploitation. Apparently Colombia and Argentina possess large reserves. China is already drilling in Cuban waters. Australia has vast reserves of gas and coal. Greenland possesses large oil reserves – perhaps greater than Iraq’s (which are exceeded only by Saudi Arabia’s). India, too. Poland, too. Angola, too. The list goes on. Last week, a small British drilling company reported that it has confirmed a shale gas deposit in northern England that could heat the country for 60 years.
But the greatest oil and gas rush of them all will probably take place in the United States and Canada – where the five largest shale oil zones in the world are all located. Drill, baby, drill.