Thursday, August 23, 2007

Peak Oil

Myron Ebell of CEI discusses fears that we are running out of oil:

A petroleum analyst I know argues -- and an industry leader I spoke to agrees -- that all the talk about running out of oil is overheated. This is for one overriding reason: all estimates of remaining oil are conditioned on price. That is, if the sale price of oil is $20/barrel, there are x number of barrels remaining in the world reserves. If the price is $80 per barrel however, there are many, many more barrels that can be recovered.

Thus remaining reserves increase the more you are willing to spend -- a position that makes intuitive sense. If technology permits the recovery of liquid oil from oil shale at $70 per barrel for example, we have far more oil than present calculations suggest.

So don't buy that electric car just yet.

I plan to write more on this in the future.

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