The peak-oil production theory may be based on faulty analysis, which could skew policy and investment decisions, according to Cambridge Energy Research Associates (CERA) in a report, "Why the Peak Oil Theory Falls Down: Myths, Legends, and the Future of Oil Resources."

CERA director of oil-industry activity Peter M. Jackson says, "The global resource base of conventional and unconventional oils, including historical production of 1.08 trillion barrels and yet-to-be-produced resources, is 4.82 trillion barrels and likely to grow.

"The 'peak oil' theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues...This is a very important debate, and as such it deserves a rational and measured discourse."

Daniel Yergin, CERA chairman, says this is the fifth time the world is said to be running out of oil. "Each time-whether it was the 'gasoline famine' at the end of World War I or the 'permanent shortage' of the 1970s-technology and the opening of new frontier areas has banished the specter of decline. There's no reason to think technology is finished this time."

The report points to above-ground factors as key in the future of oil supplies, such as geopolitics, political conflict, economics, technology, timing, openness to investment, infrastructure development, and the impact of technological change on demand for oil. According to Jackson, world oil production is not expected to peak before 2030. Instead, it will eventually follow an "undulating plateau" for one or more decades before declining slowly.

"It is likely that the situation will unfold in slow motion and there are a number of decades to prepare for the start of the undulating plateau," CERA reports.

Some of CERA's criticisms of the peak-oil theory are that it is not presented in the context of a credible systematic evaluation of available data; the model formulated by the late geophysicist M. King Hubbert "fails to recognize that recoverable-reserve estimates evolve with time and are subject to significant change, and it



Some of CERA's criticisms of the peak-oil theory are that it is not presented in the context of a credible systematic evaluation of available data; the model formulated by the late geophysicist M. King Hubbert "fails to recognize that recoverable-reserve estimates evolve with time and are subject to significant change, and it also underplays the substantial impact of technological advances."

Also, Hubbert's 1956 analysis doesn't incorporate the impact of large discoveries in Alaska and the deepwater Gulf of Mexico, CERA reports.

"In the Lower 48 where Hubbert came closest to accurately forecasting a peak, oil production in 2005 was some 66% higher than projected by Hubbert, and cumulative production between 1970 and 2005 was some 15 billion barrels higher, a variance equal to more than eight years of U.S. production at present rates," Jackson reports.

Peak-oil advocates often claim that new exploration discoveries are not enough to replace annual production, but Jackson says focusing on "discovery" and ignoring growing knowledge about field volumes disregards the fact that revisions, additions and exploration combined have generated resource growth of 320 billion barrels, nearly one-third more than total production from 1995 to 2003.

"It is no longer sensible to allow the issues about future supplies to be clouded in a debate grounded in a flawed technical argument," CERA reports.

"There is a need to identify the signposts that will herald the onset of the inevitable slowdown of production growth and ensure that policy-makers outside the energy community have a clear understanding of possible outcomes and risks."

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