Hubbert peak theory

The Hubbert peak theory is based on the observation that the amount of oil under the ground in any region is finite, therefore the rate of discovery which initially increases quickly must reach a maximum and decline. In the US, oil extraction followed the discovery curve after a time lag of 32 to 35 years.[1][2] The theory is named after American geophysicist M. King Hubbert, who created a method of modeling the production curve given an assumed ultimate recovery volume. Hubbert's Peak was achieved in the continental US in the early 1970s. Oil production peaked at 10.2 million barrels a day. Since then, it has been in a gradual decline. Peak oil as a proper noun, or "Hubbert's peak" applied more generally, refers to a singular event in history: the peak of the entire planet's oil production. After Peak Oil, according to the Hubbert Peak Theory, the rate of oil production on Earth would enter a terminal decline. Based on his theory, in a paper[3] he presented to the American Petroleum Institute in 1956, Hubbert correctly predicted that production of oil from conventional sources would peak in the continental United States around 1965-1970. Hubbert further predicted a worldwide peak at "about half a century" from publication and approximately 12 gigabarrels (GB) a year in magnitude. In a 1976 TV interview[4] Hubbert added that the actions of OPEC minght flatten the global production curve but this would only delay the peak for perhaps 10 years. (read more...)

Zentrader Note: Since 2005, US economy was push down by the tightening rate and oil shock. We know that high oil price is a form of "tax" to the broad economy. The deepness of this recession was basically hard pressed by Mr. Bernanke's tight money policy since 2005 combined with very tight fiscal environment caused by high oil price. Happy reading.