2 GUSHERS IN TEXAS As oil prospectors, some of them retired whalers, continued to harpoon the Earth, oil was struck in New York, Ohio, Oklahoma, and then, Texas. Texas was a gusher, America's first world class find. If Texas had been a sovereign country, its oil riches would have placed it in the world's top ten. The state's original reserves were 6 times greater than those of India, 4 times greater than Brazil, twice as large as Norway. Texas was big, as big as the braggadocio it came to symbolize. As thousands of men made fortunes in the oil patch, a new social class arose: the "oil millionaires." The Hunt brothers, George Bush, and Lyndon Johnson all made money in Lone Star oil. For the last 70 years the state has been America's leading oil producer. But production in Texas peaked in 1972 and has been declining rapidly since. According to the American Petroleum Institute, about 80% of all the oil that will ever be produced in Texas is gone. This is not an anomaly. Thirty-one states produce oil and all are past their peaks. Oklahoma peaked in 1927, Colorado in 1956, Wyoming in 1970, Alaska in 1988.

SWISS CHEESE Well, ok, if Pennsylvania and Texas are played out, why not drill more wells somewhere else? In fact, the U.S. is already one of the most thoroughly explored and drilled countries on Earth. Of the 4.6 million wells worldwide, 3.4 million have been drilled in this country. Very very few prospects remain. With the exception of the Arctic National Wildlife Refuge and a few deep water basins, we've been there and done that. From the oil industry's perspective, the U.S. is Swiss cheese.

THE LAST HURRAH The oil industry employs many smart, inventive, and creative people. In a quest to find more oil, the industry has developed a host of new exploration techniques, computer imaging software, and drilling methods. Many are being put to good use in the Gulf of Mexico. There, the oil majors are drilling in 5,000 feet of wateran astounding fact with the likelihood that they will soon sink wells in 10,000 feet. Analysts expect the Gulf to be America's last great bonanza. A mile under the ocean floor may lie 15 billion barrels. It's a lot of oil, but only as much as the nation uses every 2.5 years. The discovery rate for "elephants" peaked in the 1960s. Few are left to find.

HUNTING ELEPHANTS Ghawar. Burgan. Safaniya-Khafji. Zakum. These are the strange, unfamiliar names of the four largest oil fields in the world. Oil occurs rarely in nature and when it does it's often concentrated in large amounts. About 70% of the world's petroleum is found in 370 giant fields, nicknamed "elephants" because they are so huge. Western civilization;life as we know it;is based on these elephants. In part because they are so big, the elephants were easy to find and inexpensive to produce. (To get oil out of Ghawar, for example, costs the Saudis less than $1 per barrel.) The discovery rate for elephants peaked in the 1960s. It's getting harder and harder to find new ones. Indeed, many geologists believe that elephants are nearing extinction, that only a handful remain unfound.

THE COMING PEAK In the same way that U.S. oil production peaked in 1970, global production is destined to peak during the first two decades of the coming century. Some analysts expect a peak around 2005; some suggest it will be 2010; others believe it will come as late as 2020. The exact date can't be predicted, since it will depend as much on economic and political factors as on geology. The biggest wild card? Saudi Arabia, the world's most prolific oil province. If the Saudis invest hundreds of billions of dollars they could double their output to meet expected demand. But they may decide not to double production, choosing instead to produce somewhat less oil and charge more for it. Although predicting the peak is impossible, this great turning point is imminent.

COLLISION IN SLOW MOTION A decline in world oil production? The thought takes some getting used to. What seems impossible is inevitable. The crunch may arrive suddenly. Or in slow motion. As Reagan's former Energy Secretary Donald Hodel says, "We're sleepwalking to disaster." When it happens, journalists will shout, "We're running out of oil." That's not true. Rather, we are running out of cheap oil. After production peaks oil still will be readily available at a higher price, though in slowly declining amounts, for at least 50 years. What we face is not a short-term crisis but a chronic shortfall. No one will freeze in the dark (America still has a century of coal and 50 years worth of natural gas), but the transition to more expensive oil could be bumpy.

CRUDE CRUNCH As global oil production nears the peak, oil prices will rise, perhaps overnight with staggering impacts on the global economy. This absolutely predictable, absolutely inevitable oil crunch will likely have tremendous economic impacts. Hitting as the Baby Boomers retire, it could rock our economy, psychology, and sense of self.

GIME THAT OIL TIME RELIGION Of course, not everyone agrees that we face an imminent crisis. (In part, it depends on how you define "imminent." Some people define it as "before I'm dead.") Business Week recently ran a cover article on global oil. The take home: don't worry, be happy, Exxon has you covered. (Call CORE for a reprint.) Energy Secretary Pena talks hopefully about "reversing the decline in U.S. oil production." This is whistling past the graveyard. There's not that much oil left to find in the U.S. That's why the oil majors are trying to muscle in on Russia's Caspian Sea, 9,000 long miles from home. How the Caspian qualifies as "our oil" I'm not sure. The Chinese need it as badly as we do. Nonetheless, Henry Kissinger and Dick "Desert Storm" Cheney are lobbying to gain U.S. companies preferential treatment.