Hubbert Peak Theory

AAA

DEFINITION of 'Hubbert Peak Theory'

Similar to the predictions of the Hubbert Curve, the Hubbert Peak Theory implies that maximum production from an oil reserve will occur towards the middle of the reserve life cycle.

The theory suggests the production rate from a region follows a bell shaped pattern. The region can be a country or just a certain oilfield.

INVESTOPEDIA EXPLAINS 'Hubbert Peak Theory'

Although the Hubbert Peak Theory has been most discussed in reference to the oil industry, the theory is also applicable to natural gas, coal, transition metals, precious metals and even water.

Prior to natural resource extraction, a firm will often estimate the expected Hubbert Curve to gain insight into future production rates.



RELATED TERMS
  1. Hubbert Curve

    A statistical theory of oil production that states that the rate ...
  2. Probable Reserves

    After an oil exploration firm conducts a seismic survey of a ...
  3. Proven Reserves

    After an oil exploration firm conducts a seismic survey on a ...
  4. Oil Reserves

    An estimate of the amount of crude oil located in a particular ...
  5. Royalty Interest

    In the oil and gas industry this refers to ownership of a portion ...
  6. Peak Oil

    A hypothetical date referring to the world's peak crude oil production, ...
RELATED FAQS
  1. What is the difference between variance and standard deviation?

    Variance and standard deviation are both concepts that help statisticians and financial professionals understand differences ... Read Full Answer >>
  2. What variables are most important when making a prediction through sensitivity analysis?

    Sensitivity analysis is used in corporate finance and other fields as a means of making predictions based on changes in variables. ... Read Full Answer >>
  3. Did the repeal of the Glass-Steagall Act contribute to the 2008 financial crisis?

    The repeal of the Glass-Steagall Act was a minor contributor to the financial crisis, if it contributed to the crisis at ... Read Full Answer >>
  4. What types of stocks have a small difference between bid and ask prices?

    Generally, stocks that offer high liquidity have tight bid-ask spreads. Stocks that have a high volume and trade on a daily ... Read Full Answer >>
  5. What is the difference between expected return and variance?

    The expected return and variance are two statistical measures for analyzing investment portfolios. The expected return is ... Read Full Answer >>
  6. What are the most commonly used key performance metrics (KPIs) for small business ...

    Developing and tracking key performance indicators (KPIs) are pertinent aspects of running a successful small business. KPIs ... Read Full Answer >>
Related Articles
  1. Economics

    J.D. Rockefeller: From Oil Baron To Billionaire

    More than 70 years after his death, this man remains one of the great figures of Wall Street.
  2. Taxes

    Spoil Your Grandkids, Cut Your Tax Bill

    Helping your grandchildren save for college is a way to spoil them and reap some benefits yourself.
  3. Mutual Funds & ETFs

    Commodity Funds 101

    These funds make investing in gold, oil or grain an easier prospect.
  4. Options & Futures

    An Introduction To Canadian Income Trusts

    Yields in excess of 10% aren't rare, but these unique investments need to be chosen very carefully.
  5. Active Trading

    How Does Crude Oil Affect Gas Prices?

    Find out how this commodity's fluctuating price affects more than just how much you pay at the pump.
  6. Economics

    Meet OPEC, Manager Of Oil Wealth

    This organization's decisions can influence oil prices, but there is a limit to its power.
  7. Investing Basics

    What is the Rule of 70?

    The rule of 70 is an easy way to calculate how many years it will take for an investment to double in size.
  8. Economics

    Explaining the Value Chain

    A model of how businesses receive raw materials as input, add value to the raw materials, and sell finished products to customers.
  9. Fundamental Analysis

    Explaining Variance

    Variance is a measurement of the spread between numbers in a data set.
  10. Investing Basics

    Understanding Risk-Return Tradeoff

    The essence of risk-return tradeoff is embodied in the common phrase “no risk, no reward.”

You May Also Like

Hot Definitions
  1. Redemption

    The return of an investor's principal in a fixed income security, such as a preferred stock or bond; or the sale of units ...
  2. Standard Error

    The standard deviation of the sampling distribution of a statistic. Standard error is a statistical term that measures the ...
  3. Capital Stock

    The common and preferred stock a company is authorized to issue, according to their corporate charter. Capital stock represents ...
  4. Unearned Revenue

    When an individual or company receives money for a service or product that has yet to be fulfilled. Unearned revenue can ...
  5. Trailing Twelve Months - TTM

    The timeframe of the past 12 months used for reporting financial figures. A company's trailing 12 months is a representation ...
Trading Center