Oil, one of the most important, valuable substances on the planet may form in an unexpected place, according to a new study -- the crushing hot furnace of Earth's mantle.

The petroleum we rely on to fuel our cars and heat our homes were formed over millions of years as ancient, dead algae and plankton were compressed in layers of sediment and heated. Because of this, oil companies know to look for new reserves in places that are, or once were shallow marine environments.

For decades, though, scientists have toyed with a tantalizing alternative theory of petroleum formation: What if chemical reactions between water and minerals deep in Earth's mantle could send black gold bubbling up into the crust?

Alexander Goncharov of the Carnegie Institution of Washington in Washington, D.C and a team of researchers have shown that just such a thing is possible. They heated methane (CH4) up to 1,500 degrees Kelvin (2,240 degrees Fahrenheit) and mimicked the squeezing effect of being buried under over 100 kilometers (62 miles) of solid rock.

The results were astonishing -- methane readily transformed into butane (C4H10) and propane (C3H8), two common components of crude oil.

Every 10-year-old knows that oil comes from the decomposed remains of dinosaurs, a theory first floated by Russian scholar Mikhailo Lomonosov in 1757. According to this theory, rock oil forms over millions of years from the action of heat and pressure on animal remains buried in sediment. The so-called "fossil fuel" theory remained largely unchallenged for 200 years until Russian academics, led by Nikolai Kudryavtsev, suggested that hydrocarbons (from which oil derives) are generated deep within the Earth from inorganic materials.

The notion that petroleum is abiotic (not related to living organisms) in origin has been accepted as scientific fact in the former Soviet Union for 50 years, yet Western science clings to the contradictory fossil fuel theory.
This is no idle academic debate.
If the Russians are right, oil regenerates deep within the Earth and there is no looming fuel shortage.
If the fossil fuel theorists are right, then oil is a finite commodity and the pumps will run dry within a few decades. This being the case, the price of just about everything will shoot up.

Oil geologist Colin Campbell is one of the foremost proponents of the "peak oil" theory that says roughly half of all known reserves have been consumed, and new discoveries are insufficient to meet the planet's future needs. If he's right, the current oil price of $ 50 a barrel is just a way-stop en route to much higher fuel prices. Campbell posits a bleak future where oil shortages lead to "war, starvation, economic recession, possibly even the extinction of homo sapiens".
According to Campbell, the size of oil reserves is virtually a state secret in many countries, and some oil producers previously inflated their reserves to wring higher production quotas from OPEC, which are based partly on reported reserves. He says the world has so far produced 944 bn barrels, with "realistic reserves" estimated at 853 bn barrels, substantially lower than the 1,278 bn estimated by Oil & Gas Journal.

Allowing for a further 142 bn barrels still to be discovered, Campbell says peak oil will occur next year.