DEFINITION of Hubbert Curve
The Hubbert curve is a statistical theory of the production rate of a natural resource over time, which when plotted on a chart, looks like a symmetric bell-shaped curve. The Hubbert curve is based on a theory regarding the lifecycle of that the rate of extraction of a given finite natural resource, such as petroleum. Initially, while there are minimum drilling operations, the rate of production is limited. However, as infrastructure increases and larger portions of land area is explored, resource production will approach peak production. Eventually, as the natural resource becomes depleted, extraction rates begin to slow down and will eventually cease altogether.
BREAKING DOWN Hubbert Curve
The Hubbert curve was introduced by Marion King Hubbert, an American geologist and geophysicist. Hubbert first explained his theory during a presentation titled Nuclear Energy and the Fossil Fuels made to the American Petroleum Institute in 1956. Hubbert's model tied reserves, discovery rates and production rates into a formula that predicts the lifecycle of a natural resource, and predicts that peak production of a natural resource occurs in the middle of the cycle.
The Implications of the Hubbert Curve
The predictions presented by the Hubbert curve satisfy statistical constraints and are intuitively comprehensive. Since its publication, the theory has become highly regarded and popular int he scientific community for its ability to predict the depletion of numerous finite natural resources. Notably, it is the basis for the Hubbert Peak Theory, which has been used to predict peak oil production around the world. Although the Hubbert curve is a symmetrical bell shape in theory, in the real world, outside influences such as government regulation and the discovery of competing natural resources, results in a production curve that is not necessarily symmetric.