In an article at IER, I discuss the once-fashionable “peak oil” theory, which treated a country or the world’s oil production as if it were just a giant well. The economics went out the window, and instead the analysis relied merely on the natural sciences.
Peak oil theory was popular for decades because it seemed to have correctly called the peak of U.S. output, in the early 1970s. But the last few years blew the theory out of the water:
The development of shale resources, and the proliferation of hydraulic fracturing (“fracking”) and horizontal drilling, has turned the U.S. back into an oil powerhouse.
I don’t think this story is getting nearly the attention it deserves. When I was growing up in the 1980s, I distinctly remember serious grownups telling me there was an energy crisis, and the U.S. had to wean itself from oil so as not to be dependent on those wily Arab nations. If someone had said the U.S. in 30 years would overtake Saudi Arabia to lead the world in oil production, he would have been laughed out of the room.
Part of the problem with massive State interventions in energy markets–in order to fend off some future catastrophe–is that the catastrophes keep not happening, even though the interventionists didn’t get nearly what they said was vital to avoid them.