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July 31, 2007

Have we reached peak oil?

Our economy still runs on oil and will continue to do so for the foreseeable future. But it's not a renewable resource, so economists and others are keeping tabs of how much is left. N.C. State University's Mike Walden describes what they see.

"This is a subject that is very controversial," says Dr. Walden, a professor of agricultural and resource economics. "Quite frankly it's very difficult to impossible to peer down into the earth's inner surfaces and see how much oil there is, so these are all estimates.

"The good news is that most of the estimates suggest that we have more oil reserves today –- about 15 percent more -- than we had a decade ago," he adds. "But people who follow this are troubled by the fact that if they look at some of the large oil fields in the world -– and we are thinking about some oilfields in Mexico as well as in Saudi Arabia -- it appears that production from those fields has peaked and, in fact, has been going down.

"The other warning sign is that large replacement oil fields have not been found," Walden says. "So there is some thought, again among these experts, ... that maybe we have reached the point where we are getting as much oil out of the ground on an annual basis as we can and production will gradually decline in the future.

"Now one way to know this for sure is, of course, to follow oil prices. As the reserves of oil go down, the price will naturally rise."

Posted by deeshore at July 31, 2007 02:37 PM