I became interested in the “peak oil” phenomenon several years ago. In 1956, M. K. Hubbert accurately
predicted that USA petroleum production would peak between 1965 and 1970. Some experts believe that
world petroleum production has already peaked (in 2005). If so, it seems the oil companies are covering
it up. Getting up-to-date information on petroleum production is difficult. The oil companies deny that
production has already peaked, and when they do refer to a possible production peak, it’s usually 20 to
30 years in the future. However, they use shifting terminology to obfuscate the facts. If we look at data
for petroleum production (oil wells), then production has actually peaked. Terms like “liquid hydrocarbons”
and others are used to confuse the actual petroleum peak by including shale and tar sands oil, gas to liquid
processes, coal to liquids, and biofuels.
Today (July 22, 2008), for the first time, I have seen the term “peak oil” in a mainstream medium, the Los Angeles Times, so it seems that at least some mainstream news outlets have stopped aiding the oil companies in denying the obvious. Four dollar a gallon gasoline does not seem unusual in view of persistent future oil shortages that can only get worse. This does not mean that oil prices can’t come down. Persistent high prices for fuel will, of course, encourage consumer economy and investment in alternative energy such as wind and solar. In a worst case scenario, high energy prices will lead to a world economic collapse which will cause the oil futures bubble to burst, leading once again to cheap oil that nobody has any money to buy.
However, in the most likely scenario, the economy will adjust to persistently high energy prices, and cope by developing alternatives. We should expect a strong push to subsidize nuclear power in the long term. It’s still an open question whether nuclear power technology development power generation can be done safely without harming the environment, with or without government subsidy, let alone the implications of strategic weapons production from uranium and plutonium and terrorist weapons acquisition from radioactive waste.
In theory, nuclear power can be provided without undue environmental harm, but the safety and long-term viability of this source needs to be demonstrated beyond reasonable doubt by those who would undertake the very expensive option of developing it. Right now, slow neutron reactors will run out of fuel in less than a century, and the technology for fast neutron breeder reactors that can consume spent fuel from existing reactors has not yet been demonstrated. This is one area where the anti-progressives are right about the free market: the government should not further subsidize the nuclear power industry. If it’s economically viable, even when safety, environmental, liability, political, and security factors are accounted for, then the free market will provide it within a framework of diligent government regulation.