Peak oil: a theory running out of gas

One year ago, Congress responded to the chorus of Americans calling for more American energy by lifting the ban on offshore drilling. For the first time in a quarter-century, it became legal to drill for more oil and natural gas reserves offshore. This anniversary allows us to look back on how far we have come since 2008. The sad reality is we have barely moved.

Recent estimates of oil are actually an astounding three times larger than peak oil predictions, meaning the newest discoveries simply should not exist according to the theory of peak oil.

Earlier this year, Secretary of the Interior Ken Salazar announced he would delay the comment period for offshore energy exploration by six months. Salazar claimed that the previous comment period, which would have ended in March, "by no means provides enough time for public review."

Evidently 25 years of delays and bans was not enough. During that quarter-century Congress had to make the decision each year whether to renew the ban on offshore energy, yet Salazar suggested that we were somehow engaged in a "headlong rush" to explore for energy offshore.

Recent estimates of oil are actually an astounding three times larger than peak oil predictions, meaning the newest discoveries simply should not exist according to the theory of peak oil.

One reason behind this bureaucratic delay has nothing to do with developing a responsible energy policy. It has to do with the myth known as "peak oil."

Peak oil was a theory developed decades ago that suggests we will soon reach a point of maximum oil production, after which oil will only become harder and harder to find, leading to an enormous energy crisis.

In fact, many still believe this theory today, including Al Gore, who told CNN that "we are almost certainly at or near what they call peak oil." The Sierra Club's executive director, Carl Pope, once warned that peak oil could come in 2010 and that "we're better off without cheap gas."

Since anti-energy elites ignore the massive amounts of oil that we do have but are banned from extracting, they propose new energy taxes to supposedly save us from future energy crises by punishing the use of oil. After all, if oil is the problem, then coercing America away from oil usage would be the answer.

The problem is that peak oil is fundamentally wrong.

Geophysicist Marion King Hubbert first suggested in 1956 that peak oil was a reality, and that we would hit our maximum rate of production sometime around 1970. But recent estimates of oil are actually an astounding three times larger than peak oil predictions, meaning the newest discoveries simply should not exist according to the theory of peak oil.

In Brazil, there could be as much as 100 billion barrels of oil offshore, including the Tupi oil field, which is the largest oil discovery in this hemisphere in 30 years. Had Brazilians been banned from exploring and conducting new seismic tests, they never would have made this massive discovery. Now Brazil is set to become an oil exporter.

Researchers from the U.S. Geological Survey concluded earlier this year that there are massive amounts of oil and natural gas in the Chukchi Sea off Alaska's coast. They estimated that there could be as much as 157 billion barrels of oil in the Arctic, or nearly twice as much oil as was previously known to exist in that part of the world. The natural gas discovery is also greater than all of the previously known reserves in the Arctic.

Last year the USGS had to increase its estimate of oil reserves in the Bakken formation in North Dakota and Montana by 2,500%. The area is now estimated to hold more than 4 billion barrels of oil.

In Israel, experts underestimated the size of a huge natural gas discovery made in January of this year. The field is actually 16% larger than what had been estimated. Experts now claim Israel can supply itself with enough natural gas for two decades and could be an energy exporter.

In the United States, we have a 100-year supply of natural gas. Last year geologists discovered that gas reserves in the Marcellus Shale formation in Appalachia are actually 250 times larger than they estimated in 2002.

And recently, in the Gulf of Mexico, BP announced they had made a huge new discovery of oil, estimated to be as large as the biggest oil-producing spots in the Gulf, which means it could supply as much as 300,000 barrels of oil per day.

All told, there have been more than 200 new oil discoveries around the world this year alone. What these discoveries mean is our energy future does not have to be dictated by OPEC or energy taxes on American businesses. It is possible to have abundant and reliable sources of low-cost energy.

This runs contrary to what environmental extremists claim, namely that we have to make a painful transition to alternative fuels and renewables to avoid the disastrous effects of peak oil. In reality, we have reached the end of peak oil as a theory.

Newt Gingrich is a senior fellow at AEI. Steve Everley is the energy policy manager at American Solutions.

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Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

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Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

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