Breaking SMU Cox Research Dispels Peak Theories' Delusions

Peak Theories More Myth than Fact

Dallas (SMU) – The concept of peak oil has captured the imaginations of policymakers, analysts, researchers, and the public. The idea of a peaking resource, such as oil, ushering in an era of reduced growth and hardship, doesn't hold water, according to new research. Energy economist Dr. James Smith of SMU Cox provides calculations in new research which show that the "peak" is an unreliable indicator of resource scarcity, particularly for oil markets governed by the fundamentals of price, supply, and demand. While the idea of peaking may offer some indication of scarcity, it cannot be relied upon to draw firm conclusions.

The research covers scenarios that show how a "peak" shifts given low-growth, higher growth, with technological break throughs and in cases when less of the resource exists than expected.

Smith concludes from his scenarios: "If you tell me the peak is coming sooner: Should I applaud or cry? I need to see the fundamentals before I can know what arrival of the peak portends for the economy."

The paper "The Portents of Peak Oil (And Other Indicators of Resource Scarcity)" by Professor James Smith, Cary M. Maguire Chair in Oil and Gas Management, has been presented at global conferences in Asia, Europe, and the U.S.

The summary and paper are available upon request.

About SMU Cox
SMU’s Cox School of Business offers a full range of business education programs, including BBA, full-time MBA, Professional MBA (PMBA), Executive MBA (EMBA), Master of Science in Management (MSM), and Executive Education. The school also offers a number of unique resources and activities for students, ranging from its Business Leadership Center (BLC), Caruth Institute for Entrepreneurship, Maguire Energy Institute, and American Airlines Global Leadership Program (AAGLP) to its Associate Board Executive Mentoring Program and an international alumni network with chapters in more than 20 countries. SMU Cox is ranked among the top business schools nationally and internationally by major publications, including BusinessWeek, The Economist, Financial Times, Forbes, The Wall Street Journal, and U.S. News & World Report.

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