Where are We on the Oil Depletion Curve (Hubbert’s Peak)?
When we recognize that oil and gas were formed in the geological past, we admit that they are subject to depletion. Production in any place has to start at zero on discovery and end at zero on exhaustion, reaching a peak in between. Yet, such an understanding confounds classical economics, which holds that there can be no shortage in an open market and that one resource is seamlessly replaced by a substitute as need arises. With modern methods, engineers can estimate the size of an oilfield so there should be no particular technical difficulty in determining where we are on the depletion curve. The problem is in the reporting. In plain language, Proved Reserves, mean Proved-so-Far for financial purposes, not necessarily describing the full field. The consequential “Reserve Growth” gives the misleading impression that more is being found than is the case. To determine our position on the oil depletion curve we need the right numbers and the right dates of discovery, and we need to defin
