At [the 1956 meeting of the American Petroleum Institute], Marion King Hubbert, a geologist then employed by Shell Oil, presented a paper announcing that petroleum production in the United States would peak and go into permanent decline around 1970. The context of this paper needs to be recalled. In the 1950s, the United States produced more oil annually than any other nation on earth—at some points during that decade, more than every other nation on earth put together. The American oil industry had immense petroleum reserves that had already been found, and it also had the worlds most advanced and innovative technologies for finding new reserves. Oil could be discovered and produced so easily that the federal government quietly tolerated a technically illegal price-fixing scheme, managed by the Texas Railroad Commission, that set production limits on American oil companies to keep the price of oil from crashing to ruinously low levels. The idea that geological limits might restrict US oil production in the relatively near future seemed absurd enough that Hubberts superiors at Shell Oil tried to talk him out of presenting his findings to the conference. [...] After 1970, to be sure, the oil kept flowing. Frantic efforts to expand production were an obvious response; new wells were drilled in existing oil provinces, new oilfields and oil provinces were found and brought into production, and environmental concerns were elbowed aside to make way for a pipeline across Alaska so that oil from the remote North Slope fields could reach an ice-free port. None of these measures brought US petroleum production up past its 1970s peak, but the deficit could be made up by importing more oil from abroad, especially from the booming petrostates of the Persion Gulf. The difficulty was not that the United States was running out of oil; it was simply that an economy geared to constant growth in energy consumption now had to pay foreign suppliers for an ever-increasing share of its fuel supply, at prices that could no longer be regulated by the Texas Railroad Commission.
Posted on: Mon, 24 Mar 2014 12:25:18 +0000
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