Sunday, November 6, 2011
Oil Production May Be At Its Peak, Experts Say
Anyone who has recently visited a gas station has felt the pinch of the impending oil crisis by having to pay more than $3 per gallon for gas. While most people understand that we are facing a worldwide shortage of one of our most precious commodities, the reasons behind the deficiency remain somewhat vague. According to Mammoth Resource Partners, Inc., a Kentucky-based oil and gas exploration company, major media coverage has largely ignored the underlying reasons for the relentless march toward ever-higher oil and natural gas prices. Experts report that the reasons are rooted not only in Middle East chaos and Asia's booming economies, but they also predict that it's in the possibility that the world's oil production may be peaking. By definition, peak oil is the name geologists have given to a proven fact of oil exploration and development: When half of an oil field's reserves have been extracted, the field will begin to progressively yield less oil with every passing year until it yields zero. "As peak is approached, what is left in the major fields is becoming harder to extract, reducing the growth of oil supply, thus increasing its price," said Dr. Roger L. Cory, President of Mammoth Resource Partners, Inc. In short, the world has been consuming more oil while it has been drilling and extracting about the same amount of oil. These two trends cannot continue without some long-lasting effects. "The supply and demand lines are crossing, leading to huge increases in the price of oil and oil-related petroleum products," Cory predicts. Cory said there will always be oil in the ground, but the questions that producers need to ask themselves are, how hard will it be to get out, and thus how much will it cost? And how high will the going rate per barrel have to be to make it worth my while? "We have recently seen crude sold for more than $70 per barrel. Is this a temporary price spike, or part of a major, permanent upward price trend?" Cory said. "It's anyone's guess how high the price of crude will go, but triple digits per barrel certainly do not seem out of the question."