ABSTRACT
Oil Like the sources of other fossil fuels, and of metals, gems, and water, oil is in relatively fixed supply. We don’t know precisely what the supplies of any of these resources are, although in some cases we can make reasonable approximations.6 In 1956, M. King Hubbert correctly predicted that U.S. oil production would resemble a bell-shaped curve, reaching what became known as Hubbert’s Peak in the 1970s and then declining.7 Oil companies will discover additional resources over time, and supplies that are not economically viable today-as with oceans for drinking water-will become viable with improved technologies and increas-
ing resource prices. But we do know that these resources don’t grow like trees in the forest, and this knowledge must be reflected in our decisions. With no growth, the incremental and total growth functions are flat, and the sustainable yield is zero. Factoring in discount rates and increasing costs, economic models can suggest the efficient distribution of these resources over time.
