Last week I got caught up in a show from a few years ago called "Mega Disasters: Oil Apocalypse" on The History Channel, spelling out the doom our economy was facing as oil production declined over the next 100 years. Domestic production was already declining, and we had no plan B. Stock up on canned soup and ammo while you still can!

If you haven't noticed, the oil apocalypse has been delayed -- again -- and the doomsday predictors are undoubtedly eating crow while they concoct another mega disaster. "Peak oil," the theory that oil production will soon hit a peak and begin declining, sending the world into an economic disaster, failed to live up to its hype again.

It's amazing how fast perceptions of our energy future can change. One day prevailing wisdom tells us that energy costs are going to rise uncontrollably as oil production declines and new energy sources fail to live up to their promise. The next, our problems are solved, and our reliance on foreign oil appears to be evaporating before our eyes.

The oil scare that never goes away
We've been hearing about peak oil for years, and even some of the brightest minds in energy think the theory has some validity. But, like any other apocalypse, it never quite seems to unfold as the predictions assert. There are just too many factors that peak oil prognosticators can't account for in their bold predictions, so they always get them wrong.

Innovation trumps conventional wisdom
One of the problems with peak oil predictions is that they have so little imagination. They don't consider the impact of new drilling techniques that open new oil fields to massive amounts of production. A decade ago, shale drilling wasn't a well-known technique outside of the industry, much less a major contributor to our oil production. Today, Kodiak Oil & Gas (NYS: KOG) , Continental Resources, and Whiting Petroleum have turned the desolate North Dakota prairie into an energy bonanza by unlocking shale oil there.

Offshore drilling has also grown by leaps and bounds. Drillers like SeaDrill (NYS: SDRL) , Transocean (NYS: RIG) , and Noble are building ultra-deepwater rigs as fast as they can to unlock new fields off the coasts of Brazil, Angola, and other parts of the world that were once out of our reach.

Then there are Canadian oil sands, which hold the second-largest oil reserves in the world, behind Saudi Arabia. These developments alone unlocked enough oil to delay peak oil for a few more years at least.

Evidence that these innovations have turned peak oil on its head is undeniable. According to Bentek Energy, North American oil production will top a 40-year-old peak by 2016. The U.S. Energy Information Administration predicts that by 2020, U.S. oil production alone will grow another 20% to 6.7 million barrels per day. Even OPEC's surplus oil production capacity is expected to increase from 2.55 million barrels per day in 2011 to 3.92 million barrels per day by the end of 2013.

It's hard to see how oil production could fall in the short term. And longer-term peak oil theorists have even more problems on their hands.

Alternatives make a peak irrelevant
For the last century there were very few alternatives to the black gold that flowed freely from wells around the world. Today the dynamic is slowly changing, squashing the fear that peak oil once garnered. If diesel fuel gets too expensive, now truckers have an alternative in liquefied or compressed natural gas. Westport Innovations (NAS: WPRT) provides the technology to make the engines possible, and Clean Energy Fuels (NAS: CLNE) is quickly building a national natural gas highway to make fueling possible.

On the consumer side, manufacturers are releasing not only natural gas vehicles but electric vehicles, as well. Electric vehicles may not be for everyone, but as fellow Fool Alex Planes points out, the adoption rate has been even faster than that of hybrids a decade ago. These alternatives will play a roll in curbing demand for oil.

To top it off, new fuel efficiency standards that call for average fuel economy of 54.5 mpg are going to make vehicles even less dependent on oil and gas over the next two decades.

Putting peak oil to rest
In 10 years oil will no doubt play a major role in our energy picture, but the grasp it had a decade ago is slowly fading. Alternatives, efficiency, and new drilling techniques make the once frightful concept of peak oil nearly irrelevant. This isn't to suggest that prices will suddenly fall, only that a pending economic collapse because of a decline in oil production can be shelved for the time being.

Looking out beyond the next decade, it's hard to see how energy sources like solar, natural gas, wind, and even biofuels couldn't slowly replace our current addiction to oil. Sorry, peak oil theorists, this Fool is putting your predictions of doom to rest.

Increased oil production means opportunities for innovative companies in the industry. In our free report called "3 Stocks for $100 Oil," our analysts highlight three such companies that will flourish in the energy sector. Check it out by clicking here.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of Transocean and Noble. Motley Fool newsletter services have recommended buying shares of Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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peak oil is not a theory it is a certainty
you suppose we can pump at 74 million barrels a day forever?
yes the economy is doing real well these days around the world . .?
shale oil is not new its been around for decades . it is expensive and the decline rates are severe.
i could go on but you are so off base i suspect you willfully misunderstand.
fortunately the general public is much better informed then even a few years ago , and i suspect not many will be buying what your selling.

February 16 2012 at 11:26 PM Report abuse rate up rate down Reply

peak oil is not a theory it is a certainty
you suppose we can pump at 74 million barrels a day forever?
yes the economy is doing real well these days around the world . .?
shale oil is not new its been around for decades . it is expensive and the decline rates are severe.
i could go on but you are so off base i suspect you willfully misunderstand.
fortunately the general public is much better informed then even a few years ago , and i suspect not many will be buying what your selling.

February 16 2012 at 9:04 PM Report abuse rate up rate down Reply

The Straw Man

This article is based upon a fundamental misconception of the problem of Peak Oil, which is not terribly surprising as the concept is somewhat subtle and widely misperceived. It is not about "running out" but the peaking production of conventional petroleum sources, which very much appears to be the case. As the author freely admits, the alternative to conventional are these vast stores of tar sands, shale oil, and deepwater reserves- all which carry inherent higher costs in both production and emissions. If you had read the scientific literature on the subject, you would realize that this transition is both significant and very risky, not least because it is not at all clear that unconventional production growth can keep up with conventional production decline. So, we are inevitably faced with higher prices (a new plateau with lower EROEI), higher emissions, and a more shallow growth curve. Perhaps the author find this increased risk completely acceptable.

The true sustainable alternative to this situation is synthetic fuels: NH3, CHx, and maybe H2, using a new generation of high-temperature low-cost reactors as the energy input. Implementing this alternative requires preparation, but most importantly, the foresight that such an approach is necessary if we are to maintain the level of existence we now enjoy.

It should also be immediately apparent that our current energy system is far from adequate when one considers the prevalence of poverty around the globe. It is widely accepted within the scientific community that one of the most effective ways of reducing worldwide poverty is to make more energy available at a lower price. The well-to-do should make careful note of this relationship if they favor the social and economic stability which gives their assets the value they currently hold.

How do we dramatically lower the cost of energy with nuclear? We need to pick the right technology. Look for features of inherent safety, high temperatures, low pressures, high efficiency, low maintenance, air-cooling, a cleaner fuel cycle, etc. so that the plants may be much smaller, encounter far less public opposition, and allow a steady development that will lead to major technological improvements. Reducing the construction time, insurance, and overall plant complexity has the potential to at least halve the cost of new plants. And we need to do that if we are going to build a lot of them. Current global energy consumption is on the order of 13 terawatts, with tens of terawatts of projected demand at lower costs. We've got to produce electricity, synthetic fuels (and other chemicals), and potable water. We need tens of thousands of plants.

Ammonia should be the ubiquitous energy carrier of the future for the vast majority of transportation. Thorium should be the fuel. The reasons for this come down to energy density, technological feasibility, and simple economics.

February 16 2012 at 4:17 PM Report abuse rate up rate down Reply