By Donnernv
The concept of peak oil is not about running out of crude oil. It never has been. A Shell geologist (M. King Hubbert) in the '50s formulated, from his years of study of oil field production, his theory of Peak Oil. He predicted, accurately, that U.S. crude production would peak between 1965 and 1970.

Be clear on this. It’s not about running out. We are pumping crude in the U.S. today, 38 years after the U.S. peaked. The peak comes when daily output can no longer be expanded and begins to shrink inexorably, year after year.

Best estimates are that the world started with two trillion barrels in the earth. Best estimates are that one trillion remain.

For perspective, the world today uses 85 million barrels per day. That is 31 billion barrels per year. At that rate, the one trillion barrels of estimated reserves would last 32 years until it was all gone.

But that is not the issue. The problems start when daily production cannot meet daily demand.

The world is not finding enough new crude to replace the known declines, not to mention increasing production levels.

What happens with the shortfall in production? Crude prices rise. Frantic, nearly (previously) insane searches begin…tar sands; shale oil; deep, deep sea drilling; ANWR. Sound familiar?

And as a tidbit to fend off the prattle…the best estimate (shaky as all untested estimates are) for ANWR is 10 billion barrels of crude resources. On the same shaky basis, USA offshore…20 billion barrels. Together…30 billion barrels.

But that’s not the worst of it. Neither cannot begin producing for about 10 years. And either will require 20 years for full production.

The bottom line is at full bore production, both included, we’d get output starting in 2018 and have 1.5 billion barrels/year until 2037. The U.S. uses 21 million barrels per day, 7.67 billion barrels per year. That’s ignoring demand growth. Not exactly crude oil freedom at 20% of our 2007 demand.

Peak oil is here. Accept it. Do your own research. Bring me facts, and then let’s debate.

'Donnernv', a pseudonym, is a regular contributor to Motley Fool CAPS. He's an active investor, and has spent 15 years studying energy, macroeconomics and investing.

Courtesy: www.theaureport.com