Executive Summary

• Peak Oil is a multifactorial concept 
• Why the IEA forecasts aren't credible
• Why the data shows Peak Oil is alive & well
• Where oil prices will head in 2013

If you have not yet read A Tale of Two Forecasts, available free to all readers, please click here to read it first.

The U.S. is currently experiencing its second oil production recovery since 1971, when its supply peaked over 9.5 mbpd.

The first recovery took place over a nine-year period from 1976-1985. That renaissance took U.S. production back up from a low of 8.0 mbpd to nearly 9.0 mbpd. And then, over the next twenty years, U.S. production would fall steadily to its recent nadir of 5 mbpd in 2008. Over the past four years (owing to onshore production in North Dakota and Texas), the U.S. has built back an impressive 1.5 mbpd and is currently producing over 6.5 mbpd of crude oil.

Before we get to the IEA Paris forecast for the future U.S. production, let's take a look at our own Energy Information Administration (EIA) Washington forecast. The IEA Paris forecast is more difficult to understand, as it conflates oil and natural gas liquids. By contrast, the EIA Washington forecast is more specifically focused on oil production, which is easier to compare to U.S. production history. (Remember: Natural gas liquids (NGLs) are not oil. More importantly, they do not contain the same energy as oil. A barrel of oil contains 6 GJ (gigajoules) of energy, but a barrel of NGL contains just 4 GJ.)

Here is the forecast to 2040, from the EIA's (Washington) recent Annual Energy Outlook:

You can easily see that the shale oil boom accounts for nearly all of the supply growth between now and 2020. However, the EIA has done a decent modeling job here, because that new supply of oil has to offset declines in Alaska and offshore. As a result, the EIA sees that the second supply resurrection since 1971 will top out at around 7.5 mbpd. If that happens, this would make for an impressive 50% supply growth recovery from the low of 5.0 mbpd several years ago.