The problem with determining the peak in world production is one must use estimates to determine ultimate world production. There are three main numbers or concepts used to do this: 1) cumulative production or what is known as reserved production; 2) knowable, undiscovered production; or 3) what is predictable from past trends. From these concepts, we can estimate that ultimate equals cumulative production plus reserved production plus undiscovered production. However, due to each country's different analysis for total production of oil and gas, determining the ultimate world oil production is relatively impossible. A Dr. C.J. Campbell took the time to understand how each country counts its oil and gas production and predicted that the ultimate world recovery is 1.8 trillion barrels of oil.

Each country will have its peak. Hubbert predicted that the United States would reach its peak in the 1970's and it appeared to do so. The country was depending on Texas for the bulk of its oil and when the Texas Railroad Commission announced in 1971 that Texas was at 100 percent production. That is when the Organization of Petroleum Exporting Countries (OPEC) was created to control the supply of oil and gas for the world market and drove the Texas oil industry into the ground for a few years.

Hubbert suggested that it will take many years to completely deplete the world's supply of oil. However, he also suggested that each country will have its peak and then experience decreasing production from there. We are already seeing that some Middle Eastern countries may be peaking today with their production approaching 100 percent of capacity. So, what does this mean for our industries? Cheap oil production in the Middle East will likely be a thing of the past in the next 10 to 20 years, sparking a feverous interest in alternative fuels.

While there is no denying that there is a finite amount of oil and gas on this planet, new technologies and recovery methods continue to increase the percentage of an existing field's recoverable oil and gas. At the same time, while the rate of discovery of new fields declines, we are getting better at finding them by digging deeper and in more isolated areas. Who's to say there will not be yet more advances that once again tip the scales in favor of more supply than demand?

Alternative Energy Sources

A theorist by the name of Walter Yongquist exposed several myths surrounding alternative energy sources. The first myth states that alternative energy sources can readily replace oil. Yongquist asserts that this is simply not true. Every means of transportation including airplanes and cars is powered by carbon-based fuels. When carbon based fuel is no longer used, every airplane and car will need to be replaced and this will cost trillions of dollars to do. He states that 97 percent of the world's 600 millions cars are powered by gasoline or diesel fuel. That means that when the oil and gas is depleted, 582 million cars will have to be replaced by cars that run on alternative sources of energy. He also felt is was a myth to assume that alternative sources of energy can just be plugged into our present day economic system and our lifestyles will continue as usual. If we were to make better use of our most renewable source of energy, the sun, our current lifestyles would be impeded due to our modes of transportation being limited to necessity travel and not for recreational purposes as well. No longer would things look the way they do; however, each building and mode of transportation would have huge solar panels stretched across it. He claims that changing forms of energy would drastically change our lifestyles and standards of living. A third myth is that alternative energy sources are environmentally benign. This simply is not true. For a liquid version of coal to be used, huge mining endeavors would be taken on to fulfill the world's necessity of coal. If plants were used in the form of biomass to fuel the world, the value of soil would be compromised. Each type of alternative fueling brings its own environmental problems. A final myth claims that using biomass types of fuel (plants) can be a lifesaver to a fuel crisis. This is not true due to the huge costs in converting plants to liquid fuel and the detriment this would create in replacement of fuel crops. We can already see this effect with corn prices doubling in 2006, as more and more corn is converted to ethanol.

While Yongquist may be correct in calling each of these premises myths, the equation will surely change if the price of oil skyrockets. Change is usually not an instantaneous process, but rather a gradual evolution that occurs over time.