For about a decade, concerns about "Peak Oil" have led many to warn that oil prices are certain to begin a dramatic ascent sometime soon, as the world's oil output begins to fall even as demand from developing economies continues to rise.

But those fears are way overblown, say Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, a well-recognized expert on energy and economic matters, and winner of the Pulitzer Prize for his book The Prize: The Epic Quest for Oil, Money and Power, published in 1993.

In his new book, The Quest: Energy, Security and the Remaking of the Modern World, Yergin again tackles a wide range of topics, including Peak Oil, a theory developed in the 1940s by a Shell engineer named MK Hubbert. Hubbert found that it was fairly easy to predict when a given oil well's production would top out, and that as a well produced oil, it was fairly easy to get the first flows of petroleum, but increasingly harder and more expensive to do so as the "low hanging fruit" was captured.

Hubbert in effect applied then these observations of how a given well behaved to the US as a whole, as if it was one big oil field (the US at the time was the world's largest oil producer). He predicted that oil production in the US would top out somewhere between 1965 and 1970.When he turned out to be correct - sort of, as oil production did peak in the US in 1970, but with a twist (see below) - many others jumped on the Peak Oil bandwagon.

Prediction's based on Hubbert's theory then started to be applied to world oil production, with various estimates about when global oil production would top out, most of them pointing to some point in the early 21st century. That combined with rapid growth in demand for oil from China, India and perhaps soon other developing economies would mean a major mismatch between global demand and the capability of global supply to meet it. The result, some said, would not only be soaring oil prices, but with that spike also fundamental changes to society and business that had developed over decades on a platform of (mostly) fairly cheap oil prices and readily available supply.

Yergin Takes a Different View

In his new book and a guest column last week in the Wall Street Journal based on that work, Yergin says that while there is certainly some elements of truth in Hubbert's theory, Hubbert and others since have not consider a number of factors that make the resulting Peak Oil predictions far from accurate.

As one example, Yergin says that while US oil output did indeed peak in 1970 as Hubbert had predicted, it did so at levels much, much higher than Hubbert had foreseen.

Then in 1971, Hubbert estimated that the US would produce no more than 1.5 million barrels per day by 2010. Today, however, the US is producing some 5.5 million barrels daily, though this is in fact under the 1970 Peak.

On a global basis, Yergin says the date predicted for peak production keeps changing.

"The date of the predicted peak has moved over the years. It was once supposed to arrive by Thanksgiving 2005. Then the "unbridgeable supply demand gap" was expected "after 2007." Then it was to arrive in 2011. Now 'there is a significant risk of a peak before 2020,'" Yergin says.

A Plateau, not a Peak

Yergin says rather than thinking about a peak, the reality is much more likely to be a plateau in production.

"In this view, the world has decades of further growth in production before flattening out into a plateau—perhaps sometime around midcentury—at which time a more gradual decline will begin. And that decline may well come not from a scarcity of resources but from greater efficiency, which will slacken global demand," Yergin says.

Yergin says that Peak Oil adherents have generally underestimated the rise of technology improvements that will make it possible to extract more oil from the ground and other sources. He also says that from 2007 to 2009, for every barrel of oil produced in the world, 1.6 barrels of new reserves were added.

That occurred while oil demand is actually slacking in more developed economies, and variety of alternative fuel technologies for cars and trucks are being pursued that could significantly reduce overall demand.

That seems to conflict with data coming out of the annual BP Statistical Review of World Energy, which said in the 2011 report issued in June of this year that proven oil reserves worldwide grew only .5% in 2010, to 1368 billion barrels, and much of that the result of perhaps dubious data coming out of Venezuela. That made oil consumption growth of 3.1% six times the growth of reserve identification.

Nevertheless, Yergin makes the point that "The idea of "proved reserves" of oil isn't just a physical concept, accounting for a fixed amount in the "storehouse." It's also an economic concept: how much can be recovered at prevailing prices. And it's a technological concept, because advances in technology take resources that were not physically accessible and turn them into recoverable reserves."

Yergin is especially bullish on newer technologies, such as the "digital oil field," which uses sensors throughout the field to improve the data and communication between the field and a company's technology centers. He says this could unlock billions of dollars of oil in the ground the drillers have not been able to get to or efficiently extract.

Yergin expects net demand for oil to grow about 20% from 2010 to 2030, but acknowledges that this is at best an educated guess, as developments above ground can have a huge impact on how much is needed below ground, including obviously politics and innovation.

He also notes that "in a world whose $65 trillion economy depends greatly on oil, energy security will be a lasting and critical preoccupation."

He is also bullish on the potential for Canadian tar sands and other "unconventional" sources of oil to pick up the slack even if traditional in ground sources due start to see some decline.

In the end, Yergin says, "Things don't stand still in the energy industry," and that this "helps to explain why the plateau continues to recede into the horizon—and why, on a global view, Hubbert's Peak is still not in sight."

Has Yergin convinced you we don't really need to worry about Peak Oil? Why or why not? Let us know your thoughts at the Feedback button below.

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