Texas public policy foundation
Peak Oil: Still Dead

Earlier this month the administrators of The Oil Drum (perhaps the best known website advocating "Peak Oil" Theory) announced that they were closing up shop. For those not in the know, "Peak Oil" is the view that world oil production will soon begin an irreversible (and potentially rapid) decline, with various proponents divided over whether this decline would mean the end of fossil fuels or the end of Western civilization. Peak Oil enjoyed a bit of a renaissance during the mid-2000s when oil prices more than quintupled. The rise of hydraulic fracturing, however, has left the Peak Oilers decisively refuted.

Or has it? According to Noah Smith and (to a lesser extent), Matt Yglesias, recent events should be taken as vindicating Peak Oil, rather than as debunking it. Both defenses, though, amount to little more than goal post moving. Matt, for example, notes that despite recent increases in production:

America's oil boom hasn't pushed U.S. oil prices back down to mid-aughts levels and it certainly hasn't pushed U.S. oil prices back down to 1990s levels. The good old days of genuinely abundant liquid fuel really do appear to be behind us. 

Noah is more poetic in his description of the situation, but his basic point is the same:

Scarcity attacked humanity, and Human Ingenuity battled back. Through heroic efforts, doomsday was averted. But Ingenuity did not win a smashing victory, as it did when we switched from wood to coal, or from whale oil to oil. Instead, humanity was forced into a fighting retreat, with Ingenuity executing a brilliant rear-guard action and forcing Scarcity to call off its pursuit...for now. But humanity has lost ground.

The oil price data Matt and Noah use isn't adjusted for inflation, but it turns out it doesn't really matter. Even in real terms the price of oil is still a lot higher today than it was in the 1990s.

But so what? Fundamentally, Peak Oil was about what would happen to oil production, not to oil prices. The price of oil in recent decades has been driven not just by the level of production, but also by things like growing demand in China and Middle Eastern instability. Plus, as Noah himself suggests, there were Peak Oilers who said this decline would make the price go up and Peak Oilers who said it would make the price of oil go down, so clearly just looking at the price of oil can't decide the issue. You have to look at production. And when you do look at production, the case is clear: fracking has proved the Peak Oilers wrong.    

Of course, it's always possible for a Peak Oil advocate to claim that "our theory was right, it was just our timing that was off" and simply push there prediction of decline a little farther into the future. As with claims that hyper-inflation is right around the corner, the idea that oil production is about to go into decline can never be fully refuted so long as there's still a tomorrow (Noah has some good thoughts on this here). But the Peak Oil claims in the last decade are looking pretty weak, which is perhaps why sites like The Oil Drum are going away.