The End Is Coming

March 23, 2009

By: John Newcomer

You think things are bad now, just wait. The world is running out of oil.

In 1956, American geophysicist M. King Hubbert, created a method of modeling oil production that bears close watching. In his model, oil production peaks and then starts to decline due to resource depletion. It is called Hubbert’s Peak Theory. The scary part is that he correctly predicted the United States would reach its peak production in 1970. He hit the nail on the head. American oil production peaked in 1970 and has been declining ever since.

For the world, Hubbert predicted that oil production would peak somewhere between 2006 and 2016. In other words, we’re in the window of when he believed we will begin using more oil each year than we find.

If he’s right, we’ll soon be on the down hill side of the bell curve. The question is, at this moment, where are we on the bell curve? On March 18th, Shell Oil may have given us the answer, and it is not good.

For the first time, Shell’s ability to replace its oil reserves fell to 97%. That’s right one of the largest oil companies on the planet may have just gone past Hubbert’s peak. We are officially running out of oil.

The optimistic prediction is that we will not reach Peak until 2020, and that investments in alternative fuel will prove fruitful before any major lifestyle changes are required.

The pessimistic prediction is that we are already past “peak” or are very close to it, and that proactive mitigation may no longer be an option. Global depression could follow, which might stimulate a collapse of the global industrial civilization, leading to large population declines. Pretty scary stuff since we are already in one of the worst recessions in U.S. history.  But wait.

Thanks to President Taft, the United States has more time than any other country to develop alternative energies. In 1910, Congress passed the Pickett Act, which allowed President Taft to set aside shale oil rich land in California and Wyoming, as a source of fuel for the Navy. Since shale oil has always been difficult to refine, it has been sitting there just as God made it.

Want some good news? Technology is catching up and innovative ways to economically refine the shale oil have been developed. Want more good news? The shale oil reserves in Wyoming and Colorado are 5 times the sizes of the oil reserves in Saudi Arabia! Here is the best news yet. The shale oil reserves are not owned by big business, but by the United States of America.

Yes, we the taxpayer may be sitting on the last and largest oil reserves in the world. That gives us something no other country has – TIME.