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Some Experts Worry That Production Will Soon Peak. Others Warn That It Already Has.
In 1938, oil was discovered at Dhahran, near the Persian Gulf, and a small oasis became a modern city, complete with the sleek headquarters of the Saudi Aramco national oil company. If you're an American or British oil worker, life is good in the Dhahran Hills, where homes in the suburban enclaves are made of brick or fieldstone, and despite the desert heat the gardens blossom with large shade trees, flowering bougainvillea and oleander. There are bike paths, a 27-hole golf course, a rugby field and horse stables.
Once life was like this for oil workers in Texas, where roadside oil wells were symbols of a new American prosperity. Oil drillers struck a geyser of black gold at Spindletop, near Beaumont, in 1901, and landowners were soon selling $100 tracts for $20,000 and more. Instant millionaires were created, leading to the cliché of the hick in cowboy boots who paid cash for his Cadillac. But today, after yielding 153 million barrels of oil, old Spindletop is mostly a museum site. Texas still has 129 billion barrels of oil, by some estimates, but it is located deep beneath the earth, making economic recovery difficult. The average well in Texas today produces nine barrels of oil a day, compared to 6,000 barrels in oil-rich Saudi Arabia.
But this situation, too, may be fluid. Despite the reliance on it evident in nearly all strategic energy planning, Saudi oil is also a finite resource, and some fear that the desert kingdom may be the next mega-producer to lose momentum.
Is the world running out of oil? Ask that question and the geologists and strategic planners will say you're missing the point: We'll no more "run out of oil" than we will run out of water in the ocean. About half of the world's known reserves are still in the ground. The real issue, they say, is when will the planet reach the peak of oil production, after which a slow decline will inevitably clash with demand that grows at two percent per year. Finally, they add, we'll stop producing oil altogether because it will become uneconomic or because technology will have moved on, not...