Huntington Beach Oil Production Commentary

NOTE: We kept this archived story because it shows just how many predictions go wrong when it comes to oil production, the economy, etc.

Standard Gasoline Co photo of Huntington Beach Oil processing plant #8, January 1930 Former Huntington Beach Mayor Still Pumping Oil After 40 Years

Huntington Beach, Calif. ― 10 men stand in a grassy field with a large complex of buildings and derricks in the background. This was one of the most profitable regions in the country during the time. Today there are still many derricks and pumps within the city bounds and extending out to the city waters where the underground fields continue to produce. While oil is reaching all time highs in per barrel pricing, Los Angeles and Orange County drivers have likewise paid some of the highest prices for fuel in the USA in a supply and demand market situation.

"Oil City" shown in the photo above brings back memories to some who lived in Huntington Beach and grew up during the prominent oil era. From the city's first strike to its continued production today, the photograph above shows that at one time this "Oil City" had active oil processing plants such as the Standard Gasoline Company plant number 8 in Huntington Beach.

The history of oil is interesting because of the way it has been used in the past 100 years. Some say affordable supplies will be depleted in much less time as they claim peak oil production has occurred. Proponents of this theory vary in their predictions for the amount of time it will take to deplete current supplies, but they use numbers that predict emerging countries such as China and India will require larger sums in the next few years to fuel the growth and increasing wealth of average citizens who seek personal vehicles such as cars.

If the predicted decline gets under way, production could conservatively drop by 3% per year, every year. War, terrorism, extreme weather and other geopolitical factors will likely push the effective decline rate even higher, thus cutting the total supply by 50% in 7 years.

These estimates come from numerous sources, not the least of which is Vice President Dick Cheney himself (VP 2001-2009). In a 1999 speech he gave while CEO of Halliburton, Cheney stated: By some estimates, there will be an average of two-percent annual growth in global oil demand over the years ahead, along with, conservatively, a three-percent natural decline in production from existing reserves. That means by 2010 we will need an additional 50 million barrels per day.
Will global oil production peak and go into terminal decline within the next five years, as some predict?

Andrew Gould, CEO of oil services firm Schlumberger, for instance, recently stated that an accurate average decline rate is hard to estimate, but an overall figure of 8% is not unreasonable. 8% yearly decline would cut global oil production by 50% in under nine years. A seemingly unbridgeable supply/demand gap opening up after 2007 could lead to major fuel shortages and increasingly severe blackouts beginning around 2012. As we potentially head toward the downslope of the global oil production curve, we may find ourselves slipping into what some scientists are already calling the coming post industrial stone age.

Sobering thoughts that hopefully will not play out so quickly and in this manner. But for nations that build economies around driving cars and domestic productions and consumption, clearly something will have to change if oil supplies decline in the near future. The above projections and information come from Matt Savinar, author of "Life After the Oil Crash." (lifeaftertheoilcrash.net)

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