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Experts Ponder Peak of Global Oil Production

Six years into the 21st century, the United States and the world remain heavily dependent on the fuel that powered the last 100 years: oil. President Bush has gone so far as to call that dependence an "addiction."

With crude-oil prices hovering at or above $70 a barrel, more people are looking for alternative sources of energy. Others are asking how long existing sources will last.

"By a show of hands, how many of you have ever run out of gas in a car?" Matthew Simmons asked at a California energy conference in February. "What I find interesting is that cars can run at 70 mph until the last second till they run out of gas. And the moral of that story is that energy shortages can happen instantaneously."

Sounding the Alarm

Simmons believes we're nearing such a shortage. In his book Twilight in the Desert, he argues that Saudi Arabia has overstated its ability to pump more oil. And once Saudi production peaks, he says, oil production around the world will enter a period of "irreversible decline."

Simmons isn't the only one sounding that alarm. Other books on the same shelf carry ominous subtitles like The Impending World Oil Shortage and How You Can Thrive When Oil Costs $200 a Barrel.

"Peaking of usable energy is basically either a) approaching the front door, b) knocking at the world's door, or now inside the house," Simmons says. "The worst thing we can do is be in denial."

Energy analyst and historian Daniel Yergin has heard these arguments before. He counts five different periods when the world feared it was running out of oil. The first was in the 1880s. Such fears usually gain traction when oil prices are high. But each time, Yergin says, the dire warnings have proved premature.

"The last time before this time was in the 1970s, when people thought we were going to fall off the oil mountain and live in an age of permanent shortage. Since then, world supplies have increased 60 percent. I don't see why we're at the end of technology now, or why it would be finished now," Yergin says.

An Alternate Outlook

Yergin's company, Cambridge Energy Research Associates, has done a field-by-field analysis of oil deposits around the world. He expects producers can keep pumping more oil for the next 20 to 30 years.

That's not to say it will be easy to produce that much oil, Yergin says. But wars, hurricanes and a shortage of trained engineers pose a bigger challenge than how much oil is in the ground.

"There are ample supplies beneath the surface of the planet to have significant growth in oil supply for quite a number of years," Yergin says. "The technology is there, the resources are there. But the real question is what happens above ground."

He is encouraged by the growing interest in the energy business, saying he's never seen such a bubbling up of technology. Many of the venture capitalists who helped spark the Internet boom are now focused on meeting the world's energy demands.

"You'll have innovators and entrepreneurs and people trying ideas that may seem sensible today or may seem way out. But out of that whole soup will emerge some new ways of doing things," Yergin says.

Those new ways could be important, no matter how long oil supplies hold out.

One person who's looking for those new approaches is Don Paul, chief technology officer for Chevron. He spoke at the same energy conference that Matt Simmons did.

Whether you believe oil is nearing its peak, as Simmons does, or decades away from it, like Yergin, Paul says it is important to consider alternative sources of energy. He says new fuels will be needed to supplement oil, even if they are not needed to replace it.

"Energy demands in the world are not going to go down," Paul says. "The way I'd put it, we're going to need every molecule and every electron."

Copyright 2022 NPR. To see more, visit https://www.npr.org.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.