November 5, 2008

Hubbert's Peak

M. King Hubbert was a Shell Oil geologist who predicted in 1956 that oil production in the United States would rise to a peak in 1970 and then decline thereafter. Hubbert's insight was to see that production would ultimately follow discovery, though the effect would be lagged considerably, as new fields were brought into production, grew to a peak, then declined.

His prediction was verified when production plateaued in 1970 at over 10 million barrels per day and began a decline to some 5 mbd today.

"Hubbert's Curve," as he originally drew it, was a perfectly formed bell-shaped curve, beloved of mathematicians and "quants," whereas the following visualization shows it more like a mountain peak.

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