At about 11:00 AM Eastern Time Tuesday, CNBC reported that a highly-regarded research company, Cambridge Energy Research Associates, has determined that the well-touted theory that the world has or is close to “peak oil” is nonsense. CNBC’s Sharon Epperson covered the story (rough transcript):
There is this new report out that says, “Is the world running out of oil? No way!” The new report out today debunks the peak oil theory. That of course is the theory that when half of the oil is pumped out of the ground, then it’s going to peak and decline precipitously from there. Well, today, CERA, which is the Cambridge Energy Research Associates, is just out with a report saying that this in fact is a faulty theory; that the peak oil theory that the world is running out of oil is simply a faulty premise. It says that there are actually nearly 3 ¾ trillion barrels of oil out there. That is nearly three times the 1.2 trillion that most of the peak oil theorists think is out there. And they also say that this is too critical an issue to allow fear to enter into the equation. Really it takes careful analysis to really talk about some of the challenges that are out there in delivering these fuels to economies that really need them.
As CNBC anchor Michelle Caruso Cabrera read through the embargoed release, she mentioned that its author, Dan Yergin, is one of the most respected oil analysts in the world, and that in this report, he claimed: “This is the fifth time that the world is said to be running out of oil.” Cabrera paraphrased from the report and said that “every time we come up against these issues, there are new discoveries out there that seem to make this less of an issue.”
Yergin is going to be interviewed by CNBC later to discuss this report which appears to still be embargoed and has not yet been released. However, it will be quite fascinating to see how much attention this gets in the media the next couple of days.
Update: Bloomberg has now also picked up on this (emphasis mine):
Global oil production will increase for at least the next 25 years as new drilling and refining techniques make it possible to tap heretofore untouchable reserves, according to Cambridge Energy Research Associates, the consulting firm run by Daniel Yergin.
The world probably has 3.7 trillion barrels of oil left, more than twice the estimates of geologists and analysts such as Matthew Simmons, of the investment bank Simmons & Co., who argue global output is close to a peak, said Peter Jackson, director of oil-industry research for the Cambridge, Massachusetts, firm.
``The peak-oil theory causes confusion and can lead to inappropriate actions and turn attention away from the real issues,'' Jackson said in remarks prepared for a conference call today with analysts, investors and reporters. ``Oil is too critical to the global economy to allow fear to replace careful analysis about the very real challenges.''
The late geologist M. King Hubbert, working for a unit of Royal Dutch Shell Plc, first put forward in 1956 the theory that output from a specific oil deposit or region would peak and then start to decline following a predictable curve. His ideas have gained currency as oil prices tripled in the past five years and producers struggled to keep pace with rising demand in China.
The theory is ``misleading'' and based on incomplete data, according to today's report from Cambridge Energy. Worldwide oil production will rise by more than 50 percent to about 130 million barrels a day around 2030 before output plateaus, the report said. Yergin, the firm's founder, wrote ``The Prize,'' a Pulitzer-winning history of the oil industry.
When global crude output begins to fall around 2050, the decline probably will be gradual, giving policy makers, industry and energy producers time to develop new alternatives to petroleum-based fuels, the report said.
``This is the fifth time that the world is said to be running out of oil,'' Yergin said in an e-mailed statement. ``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.''