by Rod D. Martin
February 28, 2015

I’ve written about the myth of “peak oil” for at least eight years — every year brings new evidence against the prophecies of the doomsayers and yet every year their faulty premises require debunking.

As I said in 2006 (“Oil is Well: The Shortage is a Myth, and Not a New One“): “The left consistently underestimates the power of human ingenuity — given sufficient price incentives — to devise new technologies which expand supply.” The principal resource underestimated in every single dire prediction is people — their intellect, creativity, and resilience.

But of course, that other resource underestimated by so many of our friends on the left is the market: the legitimate desire of people to get ahead by solving other people’s problems. That desire incentivizes a level of creativity not often witnessed at, say, the Post Office.

So here we are in 2015. What’s happening today?

Just read Russell Gold’s “Why Peak-Oil Predictions Haven’t Come True” in The Wall Street Journal. Not only does he trace the protracted history of this fear (over a hundred years now) but he also relates this:

Then the data took a detour from the bell curve. In 2008, the U.S. produced five million barrels a day. In 2009, U.S. oil production began to rise—at first slowly, then quickly. It is still rising today. Through the first half of 2014, it averaged 8.3 million barrels a day.

What changed? An innovation in oil-field technology, which peak-oil theory didn’t anticipate. Energy companies combined hydraulic fracturing and horizontal drilling to wring oil out of super-tight rock formations in North America. The industry figured out that pumping chemically slickened water and sand into shales could create thousands of fractures, each one a tiny path for energy molecules to travel into a well.

At first, drillers targeted natural gas because they thought oil molecules were too big to be extracted. But fracking worked to make oil wells, also. Innovations allowed the industry to locate its frack jobs better and increase density. Now other countries are starting to apply the same techniques and may see the same kinds of gains.

Gold continues by pointing out that this is not a new story, just as I have for all these years.

A century ago, the energy industry found giant new oil fields in Texas and California just as fears spread that oil output had peaked. As production in the U.S. began to decline, other regions picked up the slack: the North Sea, Nigeria and Saudi Arabia. Technical innovations such as using sound waves to locate oil fields through thousands of feet of water and rock spurred a boom in deep-water drilling.

More broadly, peak-oil naysayers argue, the theory looks at the problem in the wrong way—focusing on the physical supply instead of our ingenuity in being able to reach it. “There has to be a finite limit” of oil and gas in buried reserves, says George King, a global technology consultant for Apache Corp. But the constraint on how much oil can be produced isn’t geological, he believes: “We face technical and economic limits more than anything else.”

And Mr. King is an optimist about our ability to overcome technical limits. “This is an inventive industry,” he says.

Indeed. Wealth has never been about what’s in the ground. It has always been about what’s in the mind. Ironically, the “limits to growth” crowd implicitly recognizes this with every call for developing “alternative energies,” a necessarily inventive process. That irony belies an agenda that has little to do with energy, of any sort.

So what’s next? We are already hearing of the “limits to fracking,” but such as those may be, they are no limit on ingenuity.

One of his responsibilities at Apache, a Houston-based oil and gas company, is to stay abreast of new technologies that could boost output in years ahead. For example, he is paying attention to new ways of squeezing more oil out of tight reservoirs. When rocks are fracked, a large amount of oil remains left behind. Fracking tends to free the lighter, smaller gas and oil molecules but leaves behind heavier and stickier molecules.

One idea calls for using carbon dioxide to flood into the tight rocks and push oil out ahead of it. Another is to use nanochemistry to reduce surface tension and lift oil molecules off rock, much like a detergent lifts stains. “Some companies have really neat ideas” along these lines, he says.

Indeed they do. Moore’s Law is about far more than silicon wafers. We are blessed to live in a time and place — so very rare in all of history — where people are free to give full effect to their thoughts. Some people are opposed to that, and others place little faith in it. But the economic and technological revolution of the past two and a half centuries is ample proof of its merit.