Chase Manhattan Predicted Peak Oil in 1956

Fifty two years ago – on March 8, 1956 – famed geologist and geophysicist M. King Hubbert stepped to the podium at the Spring meeting of the Southwest Section of the American Petroleum Institute and delivered a speech predicting that U.S. oil production would peak within 10-15 years. When oil did in fact peak in 1970, Hubbert enjoyed several years of acclaim and public attention during the mid to late 1970s. Hubbert’s calculations indicated that world oil peak would occur around 2000 but could be delayed 5-10 years or more by significant disruptions in world oil production. It now appears that conventional oil peaked in 2005. Many experts believe the world will peak in total petroleum liquids by 2012. We are woefully unprepared even if decline rates are lower than in the classic Hubbert model.

After the world peak in total petroleum liquids occurs, we will likely be told that the permanent energy crisis we are experiencing was a result of our not understanding energy or perhaps ignoring some obscure experts. We will likely be told that our energy policy of the past really was not an energy policy but that no one really knew what was happening at the time – that it was all just misguided, unorganized optimism and that we could not have done anything differently given the circumstances of the time. This is far from the truth.

In reality, all the information was on the table in the decade of the 1950s. Recoverable resource estimates in 1950s – which have proven to be highly accurate – indicated that we needed to be very careful with how we planned our future. Various experts including Hubbert, Pogue and Hill of Chase Manhattan Bank, and Andrew Crichton predicted that U.S. oil, natural gas, and coal resources could not possibly support a high growth economy for any reasonable length of time. A rational review of the recoverable resource estimates of the time suggests that we needed to begin a long term plan to create a sustainable society based on proven renewable energy sources.

Instead, key individuals in government, think tanks, and corporations opted to use their influence and decision making capacity to forward a perpetual high-growth economy dependent on high-grade finite fossil fuels in the hopes that technology would make low-grade resources economic over time. They believed that speculative technological advances including coal to liquids, oil shale, breeder reactors, fusion, and enhanced oil recovery would become economic in the long run, thereby justifying the continuing growth of a consumerist suburban, car-oriented way of life and fueling the development of a highly industrial globalized system for the rest of the world.

This imprudent technological optimism still continues today, with oft-unchallenged assumptions that many of the speculative solutions of the past and a few newer concepts (e.g., hydrogen, cellulosic ethanol) will be able to seamlessly replace oil, capture any carbon that is emitted in the process and eventually substitute any finite fossil fuel resource when its exhaustion is imminent.

In the next year, the Hubbert Tribute will begin the process of explaining how and why we are in the predicament we find ourselves in today. We will uncover articles and reports of yesteryear that forebode of today’s energy crisis. We will show the connections between some of the largest U.S. corporations, key government figures, and influential think tanks, and explain how they worked together to forward domestic and foreign policy that has us so egregiously dependent on oil and other dwindling fossil fuels. We will also explain the geopolitical circumstances that may have been used to rationalize these unfortunate decisions.

A prime example is a publication that came to the same conclusion as Hubbert’s 1956 speech and garnered even more attention from the media and policy makers – Future Growth and Financial Requirements of the World Petroleum Industry by Joseph Pogue and Kenneth Hill of the Petroleum Department of Chase Manhattan Bank. Chase Manhattan Bank is the world’s largest financier of petroleum development projects.

The Chase Manhattan report was published February 21, 1956 for presentation at the Annual Meeting of the Petroleum Branch of the American Institute of Mining, Metallurgical and Petroleum Engineers and was reported in the New York Times. Hubbert also referenced this paper in his 1956 paper “Nuclear Energy and the Fossil Fuels” for his seminal speech. As shown in the figure below, the report concluded that US production would likely occur between 1965 – 1970 based on the assumption that only 85 billion barrels of oil would be discovered in the lower 48 states after 1956. The report also indicated that the costs associated with expanding efforts to find and produce petroleum in the United States would continue to increase and require greater capital investment in the petroleum industry.

Pogue and Hill Oil Curve

Over the past six months, the Hubbert Tribute has been educating presidential candidate staff on peak oil and will be expanding this effort to include key congressional leaders on the implications of peak oil. Our aim is help increase the likelihood that the incoming administration and Congress will develop a responsible national energy policy in the United States.

To justify any change in our present system and to provide the foundation for the development of responsible energy policy, we have to start with the basics – where we are now with respect to oil , how we got here, and what options we have going forward. We call this Oil Transparency.

A comprehensive Oil Transparency strategy would include the best information about oil still in the ground, as well as an understanding of the assumptions that go into world oil production models, what exactly is defined as oil, and how quickly and economically substitutes can be produced. Oil transparency can include alternative sources (like shale, tar sands, etc.) but must also openly consider the ecological and climate consequences of turning to these sources. Lastly, we need to understand how we came to be in this predicament. Deciphering U.S. energy policy over the past six decades will help us understand how we arrived to this perilous situation and what kinds of changes need to be put in place to make sure that the mistakes of yesteryear are not multiplied into the future.

We no longer have the luxury of planning our economy around speculative technological advances that may never materialize or believing that vast of amounts of energy resources will discovered or will replace oil just because they exist or somehow they may be discovered. We need a responsible energy policy that addresses both peak oil and climate change that has proven technologies at its core and rational standard methodologies for estimating EROEI (energy returned on energy invested) and carbon emissions for all proposed alternatives. This is the leading possibility for a development of a responsible energy policy that will begin the transition towards a sustainable future.

About the Hubbert Tribute

The Hubbert Tribute is energy policy think tank and an online tribute to one of America’s greatest thinkers and scientists, M. King Hubbert (1903-1989). The tribute was first unveiled on the 50 year anniversary of Hubbert’s seminal speech in 1956 when he predicted that U.S. oil production would peak within 10-15 years. The purpose of this tribute is to raise awareness of and celebrate Hubbert’s accomplishments, so that industrial society can better understand the contemporary significance of his work. The Hubbert Tribute aims to uncover more contextual information about M King Hubbert’s work and to better understand how U.S. energy policy was architected over the past half century as well as to help guide policymakers toward a sustainable energy policy.

Over the past six months, the Hubbert Tribute has spoken with staffers with every major presidential candidate and provided information on peak oil. We have worked with renowned energy experts including co-authors of the DOE funded “Hirsch Report” Roger Bezdek and Robert Hirsch, and former industry expert Jan Lundberg among others to provide briefings to the campaign staff of presidential candidates. The Hubbert Tribute is partnering with Inspiring Green Leadership and other peak oil experts to offer webinars and briefings on peak oil and climate change to all presidential candidates with the aim of getting these issues on their radar − if not their platform.

Please contact about internship and volunteer opportunities, as well as about donating to this essential work.

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Published in: on March 8, 2008 at 11:58 pm  Comments (12)  
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