Economics Peak Oil Paper

	Peak Oil is the idea that Oil, being a natural resource with a finite amount, will soon reach the point where the most oil ever produced will have occured, and oil production will decline after this point. This theory was originally developed by Marion Hubbert. Though some beloieve that peak oil will soon be a reality, current statistics may prove otherwise.
	The International Energy Agency believes that oil production will peak in the years leading up to 2030. The ever increasing demand combined with the slow decrease in production has convinced some that the peak will be reached.
	Some people disagree with this prediction however, and completely disagree with the theory of peak oil. Hubbert's theory, some argue, ignores unconventional fuel sources such as tar sands. Fossil fuel production has in fact been in a twelve percent uptrend in the years between 2005 and 2010. New tecnologies have made more oil recoverable than ever before. In Hubbert's time, the total amount of oil on earth was estimated to be 10 trillion barrels of oil, and only ten percent of that oil was thought to be recoverable. Now tecnology allows extraction of thirty-five percent of that oil, and as tecnology improves, the amount of recoverable oil will increase.
	Peak oil will be an eventuality, but it will not be a reality for many years to come.The past periods of low gasoline prices have caused new oil discoveries to be disincentivized, and so oil is not being discovered because of its lack of profit. The current rise in prices however has reincentivized the finding of new sources of oil. The conflict in the oil producing countries has caused instability, which has also driven up prices. Peak oil theorists argue that the United States has invaded Iraq as a means to secure their supplies of oil, but the United States intervention could be more easily explained as a means to increase stability in the country and allow new oil production to occur. Peak oil proponents believe that Saudi Arabia, in looking for new areas to drill for oil is running out, but Saudi Arabia has explained that drilling in new locations helps to find new pockets of oil and to maintain and increase overall production of oil in its oil fields. Peak oil alarmists believe that it is of concern that the Ghawar oil field in Saudi Arabia is made up of thirty-five percent water, but again the Saudis explain that this is to keep pressure in the wells high, and allow more oil to be extracted. They also remind those fearing the imminence of peak oil that the world average for percent water in the oil fields is seventy-five, more than double that of their fields. It is true that oil discoveries between 1960 and 1989 doubled that of oil production while discoveries between 1990 and 2006 have been only half of that produced, however what is often forgotten is that original estimates are often much less than what is eventually able to be extracated through newer tecnology, or simply because of an underestimation of the size of the estimate. Though peak oil may occur, the statistcs of today show that it will not happen for some time.
	Though the rise in gasoline prices, and instability of some of the countries in which oil is produced may be seen as evidence of oil reaching its peak, closer analysis can be used to show that it can be attributed to temporary setbacks in oil production, rather that proof of oil's decline.