I had just gotten my license to drive a couple a years earlier when the Gas Lines of the 70's and OPEC came in to existence. And it wasn't pretty sitting in gasoline lines that stretched a few blocks back from the nearest pump. Sad thing is, it all didn't have to happen.
Hubbert's Peak Theory
The theory is named after American geophysicist Marion King Hubbert, who created a method of modeling known oil reserves and production rates. Oil companies now routinely use Hubbert's methods to predict future yields of existing oil fields.
Now, let's go back to 1956. Professor Hubbert, in a paper he presented to the American Petroleum Institute in 1956, correctly predicted that production of oil from conventional sources would peak in the continental United States around 1965-1970 (actual peak was 1970). Hubbert further predicted a worldwide peak at "about half a century" from publication (about 2006). And his second prediction of a worldwide peak in fifty years from when he made the speech in 1956, puts him in the.... "Nostradamus category."
He claims after the speech, that Shell Oil Headquarters had him on the phone, imploring him not to present, up until it was time to make his presentation. The P.R. campaign that followed to discredit his Theory obviously worked and his amazing accurate forecasts were ignored...until Now!
OPEC
Back in the 1980's OPEC quietly made a rule change, which said that member countries could extract oil in proportion to their stated reserves. In other words, in order to be fair to every member country. You could only pump out a certain percentage of what you had in the ground on a annual basis.
Because these countries wanted to extract and export as much as they could without violating this new ruling, over the next two years every OPEC country's reserves increased dramatically. From 50 to 250 percent. (An amazing feat, seeing how new discoveries were declining at the time) Saudi Arabia went from 140 billion barrels of reported reserves to 240 billion barrels of reserves in just one year.
Oil Production
In fact, the truth is that as of around 2005, Iran produced 1/3 less than it did in 1974. Kuwait 30% less than it did in 1972 and Libya is at less than half its peak which was reached in 1970. And the kicker: there is no independent entity out in the world actually dipping oil sticks in these countries checking to see if their estimates are worth anything. And if there was, you would not be allowed in. As "known reserves" (as opposed to the estimates that are reported) are State secrets in these countries.
Lately, there has been all this gibberish about how these runaway oil prices are the workings of some Darth Vader out to control and destroy the world at his mercy. Fact may be that the Speculators in the futures markets are connecting the same dots. That in fact, we are not only outstripping more than we pump out but that the estimates, that we have enough oil in the ground for at least another couple of generations. Is that estimation a generation short?
You would think that our government would know if this were true, given all the loot we spend on Intelligence. Maybe they do. President Bush did refuse the Congress's demands that we stop adding to our Petroleum Reserves as long as he could.