Does anyone remember the peak Oil theory? With Canadian and U.S. oil production booming enough to lift worldwide production, those who had claimed that half of the world’s ultimate crude oil reserves had been produced and that production was irreversibly declining have fallen silent.

I’ve always considered the Peak Oil theory to be gibberish – and wrote as much in 2008, when oil prices peaked at around US$147 per barrel. At the time, I was surrounded by voices claiming prices would soar further, heating a home would become unaffordable and world trade would all but collapse.

Months later, it was world oil prices that collapsed, to about US$30 per barrel. Then, oil production in both Canada and the U.S. – long written off as a virtual oil resource wasteland – began to creep up, then roar. Today, musing that energy independence is within North America’s grasp is less fanciful than the Peak Oil theory.

What happened? Drilling oil wells downward and then horizontally exposes more of the reservoir rock to the wellbore, then applying hydraulic pressure cracks the rock and exposes still greater surface area. Using these techniques have transformed geological reservoirs that had been technical riddles or economic losers into gushers.

The fact is governments have almost always thought their countries were about to run out of oil, either because the technology of every age is capable of producing only so much or because government regulation or corruption holds back the country’s oil production. As it happened, world oil production never quite turned the predicted corner into terminal decline. Instead, there have been successive waves of growth as technology and/or pricing spurs industry activity everywhere, from the inventor’s shop to the drilling roughneck.

The horizontal drilling/”fracking” revolutions allowed the U.S. in 2012 to record the largest single-year growth in oil production in its history. Last year, U.S. production was about 10% of world production.

In Canada, the long grind to make the oilsands viable hit its current pace a few years ago. Production now is almost two million barrels per day (much of that thanks to horizontal drilling, but without fracking), while conventional production also is reviving. By 2030, Canada’s oil production is predicted to reach 6.7 million barrels per day.

North American oil consumption is about 21 million barrels per day. Assume U.S. oil production grows by another two million barrels per day over the next 15 years – a modest assumption. And, let’s say, overall consumption remains flat – also not unrealistic, given gains in energy efficiency and switching to natural gas.

That would cut North American oil imports to about three million barrels per day, representing a huge increase in energy security from the 1970s and effectively making our continent independent of the Middle East. Add in one million barrels per day from Mexico, growing exports from Brazil and a modest recovery in Venezuela, and the Western Hemisphere becomes a net exporter of oil – just as we are of food. The implications are vast.

More of Koch’s writing can be found at www.drjandmrk.com.

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