Why 1970 Matters in Oil Production

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I admit that I sometimes have a little TOO much fun reminding the oil optimists about 1970 - it is sort of a low blow. But you have to admit, it works - few things will shut down a nonsense argument about how "Peak Oil is dead" better than simply reminding people that the peak of US oil production was in 1970.

The arguments of the oil optimists WOULD be stronger if they simply acknowledged that fact, but they never do: they create charts that mysteriously don't go back as far as 1970, or state current oil production facts in ways they hope will fool the public into thinking we're at all time highs when we're nowhere close.

But there are two quick reasons 1970 matters, one obvious, and one not so obvious.

The first, I've already mentioned. The US simply produced more oil in 1970 than we do today, that's why it was the PEAK of US oil production - the maximum rate. It's really tough to make some sort of "Peak Oil is dead" argument when we haven't matched the peak production rate in over 40 years.

But the second reason is actually more important to the entire Peak Oil Debate. Let's imagine for a second that the decline rates of unconventional oil aren't as bad as reported, let's also assume that conventional oil production ceases its decline and stabilizes a bit, and let's also assume that unconventional oil can keep up it's dramatic climb for the next 5 years or so.

And somewhere down the line US oil production (crude not "total liquids") in 2016 or 2017 actually beats the 1970 rate. What would that mean? Would it mean that Peak Oil is dead?

Compare for a second those two peaks of 1970 and 2017 - 47 years apart. Then ask WHY could our petroleum engineering ancestors produce so much oil in 1970 without being blessed with the advanced technology and historically high oil prices of today? In a sentence, this is the difference between conventional crude which made up all the oil produced in 1970 and the unconventional crude that makes up the majority of the oil the US produces today.

Conventional crude is easy, and cheap, but it's in strong decline. Unconventional crude is difficult, and only profitable to attack when oil prices are at historic highs - with damaging consequences to the economy.

But to take a quick step back to reality, here in 2013 - there really aren't a lot of people even predicting that we will be ABLE to beat the maximum rate of 1970. The EIA predicts US production will average 7.470 mbpd in 2013 and 8.428 mbpd in 2014, a big jump but here the EIA is already predicting a decline in the growth rate.

In a recent article, James Hamilton wrote: "The surge over the last two years is unprecedented. Even so, the levels for the first half of 2013 remain 2.5 mb/d below the peak of 1970. If the EIA projections above are correct, none of this is going to change the fact that U.S. production peaked 40 years ago. Instead, tight oil will give a dramatic but temporary bump back up in a longer trajectory of decline, similar to that provided by new production from Alaska in the mid 1980s."

50 years from now when historians ask, "When was the peak of US oil production," right now the good money is saying that the answer will still be: 1970.