Recently, we have experienced gasoline price hikes because of a regional refinery’s seasonal output being reduced.
But what if that experience was not one that was unique?
What would you say if I were to submit that future gas prices could double by the end of the decade? What if I also submitted that it had nothing to do with those regional refineries cutting their seasonal output?
That reality will be hitting home sooner rather than later, and the culprit is the global peak production of oil.
Global petroleum production is documented to have peaked in the summer of 2007. Some more in-depth data has that date pegged in 2005. Many sources confirm this reality, such as the International Energy Agency (IEA, Europe), former industry geologists, most notably Colin Campbell, and most recently, the German and British governments.
We have officially entered the second half of the age of oil. In other words, we are on the “bumpy plateau” for a few years until we reach the other side of M. King Hubbert’s “Hubbert’s Peak.”
Hubbert (a Shell Oil geophysicist from 1943 to 1964) predicted the U.S. peak in oil production around the early 1970s, and sure enough, the data proved him right as the U.S. peaked in 1971 at nearly 10 million barrels a day.
The U.S. produces 5.5 million to 6 million barrels a day today, and much of it is from unconventional resources, such as the Bakken shale, tar sands, and off our coasts in the ocean. Those resources are extremely costly to produce and bring to market, thus the rise in refined gasoline prices.
Hubbert also modeled world peak production, and that date was somewhere between the early 2000s to 2012. It would appear that Hubbert was spot on again, as the globe peaked in 2007.
Prepare to pay for a high-cost energy future.