Report: Peak Oil Theory Faulty

>An energy research firm has released a report that questions the basic assumptions of the Peak Oil Theory of petroleum reserves, which attempts to calculate the point in time when global oil production will reach its zenith and thereafter decline. Cambridge Energy Research Associates (CERA), a consulting firm headquartered in Cambridge, Mass., yesterday announced conclusions from its study, which emphasized strenuously that the peak oil argument is based on faulty analysis and that the world is in no danger from a looming energy crisis.

The 16-page report (priced US $1000), entitled "Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources", argues that the Peak Oil Theory fails because of serious flaws in logic and application, according to CERA. It says that the future of petroleum as a resource is finite but that the midpoint in the history of oil production will follow a protracted, undulating plateau. It estimates that world oil reserves contain 3.74 trillion barrels, which it says are three times as large as the 1.2 trillion barrels estimated by the proponents of Peak Oil. And it states that the theory, originally proposed by the late American geophysicist Marion King Hubbert and now supported by many scientists and environmentalists, has the potential to, according to a statement from CERA, 'distort critical policy and investment decisions and cloud the debate' over the future of energy production.

"The 'peak oil' theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues," the author of the report, CERA Director of Oil Industry Activity Peter M. Jackson, states. "Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges with delivering liquid fuels to meet the needs of growing economies. This is a very important debate, and as such it deserves a rational and measured discourse.... It is not helpful to couch the debate in terms of a superficial analysis of reservoir constraints. It will be aboveground factors such as geopolitics, conflict, economics, and technology that will dictate the outcome."

The CERA report says that not only will world oil production not peak before 2030, but that the idea of a peak is itself "a dramatic but highly questionable image." It suggests that the global production outline will not be a simple bell curve, as postulated by Hubbert, but it will be asymmetrical—with the slope of decline more gradual and 'not mirroring the rapid rate of increase—and strongly skewed past the geometric peak', which could last for decades.

"Corporations, governments, and other groups, including nongovernmental organizations, need to have a coherent description of how and when the undulating plateau will evolve so that rational policy and investment choices can be made," the report states.

"It is likely that the situation will unfold in slow motion and that there are a number of decades to prepare for the start of the undulating plateau," it concludes. "This means that there is time to consider the best way to develop viable energy alternatives that would eventually provide the bulk of our transport energy needs and ensure that there is a useable production stream of conventional crude for some time to come."

CERA's analysis may become as controversial as the Peak Oil Theory itself. However, it should generate intense new dialog in the debate over the future of the world's energy supply, which may lead to better understanding of how we should plan for the future on a global basis. And that is always welcome. So let the discussion begin—anew—with as much informed input as possible.

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