The Oil Drum

Opening up Alaska and the U.S. coastal regions for drilling at this juncture probably would have nil effect on the timing of global peak production. It would not change the shape of the global Hubbert curve since Hubbert's method assumes that all the significant remaining oil fields would be searched for, discovered, and used in the normal pattern, and that we wouldn't be so stupid as to ban promising areas from drilling just to keep from disturbing the habitat of the yellow speckled squirrel. If we were to proceed with the normal search and exploit pattern now, it would just try to catch us up a tiny fraction to the theoretical Hubbert projected peak, which we're passing already.

Economist types often fault Hubbert's method for projecting the global peak just because it was so accurate in predicting the U.S. peak. The global peak, they have long said, will involve such a price climb that, as in all commodity cycles, the higher price will bring a rush of new supply on the market. This makes some sense if you consider the basic geologic fact that about half the oil in a field is left there because it becomes uneconomic to recover. That's a huge amount of oil just waiting for the right economics. But I would direct their attention to the real world example of the U.S. peak in 1970. The price of oil climbed some 900% over the 10 years following this peak. This astonishing price climb did not bring the left behind oil rushing to market and did not alter the close following of U.S. production to Hubbert's curve.

Another big factor missed by economists with all the left behind oil, as well as shale, oil sands, and all unconventional oil, is flow rate. We have been used to conventional production where oil under high natural pressure comes spewing out of the ground already made up for us and ready to put into a pipeline. This is a vastly different type of flow rate than having to grind up, heat up, lift up, and manufacture oil using vast amounts of energy in the process. They don't understand ELM (the Export Land Model) or net energy. High flow rate net exported net energy is what sets oil prices.