The Depletion Paradox

Last month we published the post An Astonishing Projection. We described the startling ExxonMobil forecast that oil supplies will plummet, starting around the year 2026. In informal follow-up discussions, I suggested that the implications of this report are more important than the recent election results.

Further analysis of oil production in the United States is provided by the company Goehring & Rozencwajc at The Depletion Paradox. Their analysis is based on the work of M. King Hubbert, but includes machine learning and artificial intelligence to ‘address the complexities of shale production’.

The following quotations are from the article.

The great drama of American shale production may now be nearing its final act. For years, we have anticipated that the relentless growth in shale output would crest by late 2024 or early 2025, catching many off-guard. In hindsight, even this expectation might have erred on the side of caution. Quietly and without much fanfare, both shale oil and shale gas appear to have passed their zenith several months ago.

The primary forces behind the current downturn are neither policy-related nor purely economic—they are geological and inexorable.

This slowdown couldn’t come at a worse time. Since 2010, the growth in global oil demand has been entirely met by shale crude and NGLs.

Even with rising prices, we doubt shale production will surge.

The article is technical. But it does seem to endorse the ExxonMobil forecast. We can expect the price of oil and gas to rise ― not due to politics, but due to depletion. There are also likely to be significant shortages of oil and gas in the coming years. This situation is a repeat of what happened in the 1970s. However, this time there do not appear to be any new sources of oil and gas to develop, as there were 20 years ago.