Peak Oil Theory

Abstract

Most economic theories are wrong. Fortunately, most wrong theories are irrelevant. But some wrong theories are relevant. One of these latter theories is Marion King Hubbert’s peak oil theory, postulated in 1956. Hubbert was a geologist who thought that oil exploration is an uncertain undertaking. Frequently, drilling is en vain; in a few cases, gas is discovered and in another few cases oil. Given uncertainty, only proven reserves are said to be reliable. Proven reserves appear as a peak in the known graphs. In lucky times, we find ourselves on the ascending part of the bell-shaped curve. In less favorable times, we slip downward on the descending part of Hubbert’s peak. Oil reserves dwindle and might come to an end. Hubbert’s peak oil theory is still popular, but doubly false: It predicts crises which do not occur and misses to handle crises which occur.