By Kelly Sloan

THE RIGHT WORD

The onset of this week in Denver has been witness to a conference hosted by the Association for the Study of Peak Oil, a collection of hand-wringers, theorists, and computer-modelers (co-founded, incidentally, by none other than Randy Udall, brother of U.S. Senator Mark Udall), who subscribe to the proposition that the world has reached, or will soon reach, the point of maximum oil production. This historic juncture, the theory asserts, will serve to signal the beginning of the end of the fossil-fueled society, as worldwide demand transcends supply, resulting in a steady, irreversible decline in oil production, terminating at the moment when the very last thimbleful of crude is cajoled out of the ground.

Like virtually all successful fallacies, this one incorporates a large measure of truth; as a finite commodity, the world oil supply will, eventually, be exhausted. Insofar as this is the case, the theory is valid — all other factors remaining fixed, there WILL come a point in time where demand outstrips supply, and production thereby enters a terminal decline phase. The question, of course, is WHEN this will occur.

The most strident peak-oilers postulate that the date is imminent; indeed, many say it has already come and gone. The problem with their reasoning is best illustrated through an example from economic history.

In 1803, Thomas Robert Malthus presented the second edition of his “Essay on the Principle of Population.” In it, he laid out his theory that the rate of population growth would outpace the rate of increase in the food supply. He predicted that famine would ravage the earth in short order.

What Malthus forgot to consider was the role of technological advances in the food production industry. The Agricultural revolution spurred by improved tools, seeds and techniques, enabled many more people to be fed by the labor of many fewer people (and on less acreage).

In a similar vein, the proponents of peak oil tend to overlook some key factors: advances in drilling, exploration, production, and conveyance of oil and natural gas have served to make available sources which as little as a decade ago were considered unrecoverable, and hence not included on peak prediction spreadsheets. Horizontal and directional drilling capabilities, breakthroughs in well logging and evaluation technologies, and advances in production techniques serve as a few examples of innovations which have increased accessibility to, and improved recovery of, hitherto unobtainable resources.

Also conveniently ignored in the petro-doomsday scenarios, are the roles played by unconventional sources, such as oil sand, oil shale, and tight gas formations. For instance, Canada's oil sands, which at last count hold more than 170 billion barrels of recoverable oil located in northern Alberta, were thought, 40 years ago, to be too expensive and technologically prohibitive to produce on a widespread, commercial scale. Today, oil sands production, both through mining, and in situ (in place) production, using modern techniques such as Steam Assisted Gravity Drainage, accounts for nearly 10 percent of U.S. oil imports, or half of Canadian oil exports. And conservative estimates place the number of recoverable barrels in our own oil shale at between 500 billion and 1.1 trillion (with a ‘T'). To put that in perspective, consider that the lower number represents roughly triple the proven resources in the Middle East.

Whether or not the much ballyhooed oil peak arrives tomorrow (as many of the Denver attendees seem to suggest) or anywhere from 40 to 100 years from now (as the bulk of the industry that makes its living looking for the stuff, and the government agency charged with cataloguing the amount of it says), the larger question of U.S. energy policy remains.

It is an undisputed fact that the United States sits on top of vast amounts of untapped resources, both conventional (on Alaska's North Slope, ANWR, North Dakota-Montana's barely tapped Bakken and Three Forks formations, and off the coasts of California, Florida, and in the Gulf of Mexico), and unconventional (the aforementioned Piceance oil shale, and expansive gas plays throughout the country). In addition, we must also liberate ourselves from the superstition that a viable replacement energy source will magically appear through government fiat.

Oil will, necessarily, be replaced someday, but the substitute technology will arise, not as a result of however well-intentioned federal dictates, but from the ingenuity released by an individual, or group of individuals, seeking to capitalize on an innovation, arrived at by acting in their own best interest. In the meantime, it behooves us as a nation to act in our national best interest, and develop the resources at our disposal. Lifting ill-conceived drilling restrictions and allowing research on the best, most environmentally benign methods of enticing oil from shale would be excellent places to start.

As for the members of the liberal-left establishment beguiled by the Malthusian conjectures of peak oil theory — at least they have finally found an application of the laws of supply and demand that they can wrap their heads around.

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Kelly Sloan is chairman of the Policy Watch group for the Western Slope Conservative Alliance, and director of the Mesa County Chapter of Americans For Prosperity, a national organization of grassroots volunteers committed to economic freedom and limited government. Opinions expressed in Sloan's column are those of his own and do not represent the views of WSCA or AFP.

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