The peak-oil hypothesis states that fossil fuel resources are finite and will reach a point where they begin a period of steady decline until they are depleted. This isn't a political philosophy, but a scientifically based belief.
It has been commonly believed that domestic oil production peaked in 1972 under Richard Nixon. Production continued to drop, or was flat, under Ford, Carter, Reagan, Bush, Clinton and Bush. And then came Obama â the perceived "enemy" of the oil industry and domestic oil production. One would expect an extreme drop in domestic production since the beginning of 2009. But domestic oil production is up. Way up.
Some experts predict a price of $50 per barrel by next year and gas prices as low as $2.50. These predictions are predicated less on Michelle Bachman's promise if elected president than it is on lower industrial and consumer demand due to the economic recession and a shocking increase in the domestic oil supply.
The source for this increase production is two-fold. First, the sheer number of domestic wells being drilled has gone up dramatically. In Utah, we are seeing record numbers of drilling permits approved. The Obama Administration approved 1,515 permits in 2011 and has approved 1,213 permits so far in 2012, with a full three months to go, respectively the fourth and fifth-highest approval levels since 1985.
Second, despite the outcry of environmentalists, there has been a surge in fracking, or hydraulic fracturing. For example, fracking recently led to Andarko Petroleum making the largest domestic oil discovery since 1972. According to the US Energy Information Administration: "Proved reserves of U.S. oil and natural gas in 2010 rose by the highest amounts ever recorded since the EIA began publishing â¦ estimates in 1977. Net additions to proved reserves â¦ in 2010 totaled 2.9 billion barrels, surpassing the previous high of 1.8 billion barrels added in 2009 by 63 percent."
Goldman Sachs forecasts that in five years, America will produce more oil than Saudi Arabia.
Fracking drives the environmentalist crowd nuts and it's quite possible that it should drive us all nuts, as it may well be causing irreparable harm, uses huge amounts of water and a toxic mix of chemicals, and lessens the urgency to find solutions to our love affair with fossil fuels.
This explosion in domestic oil production doesn't change the fact that the peak-oil hypothesis is real and our dependence on fossil fuels impacts our economy and our environment, though current supply and demand does give us more time to deal with the economic impact of a dwindling supply and ever-increasing thirst for crude.
Nevertheless, we must continue to develop alternate energy sources and the debate about the government's role in that process should continue.
Should the government remove incentives in place since the nascent days of the oil and gas industry? Should the government provide more and larger incentives for the development and use of alternate energy sources like natural gas, solar, wind and geothermal? Should the government be involved in developing a nationwide supply chain for natural gas or electric-powered vehicles?
As we debate these questions, we should be able to all agree on some simple facts.
First, domestic oil production is on the rise more so than at any time since the period from 1920 to 1970. And second, despite the rhetoric, the Obama administration is hardly the oil and gas industry Scrooge that some would have us believe.
Adam Bronfman is a businessman, philanthropist and an adviser to the Alliance for a Better UTAH (http://www.betterutah.org). He lives in Park City.