Peak Oil goes mainstream?

The New York Times > Business > An Oil Enigma: Production Falls Even as Reserves Rise

Combined with a survey from the International Energy Agency that shows rising demand, the drop in production at the supermajors offers more evidence that energy prices may stay high for the foreseeable future, said Steven Pfeifer, senior oil analyst at Merrill Lynch.

"The data is starting to say that underlying all this, the supply-demand balance is tighter than we thought," Mr. Pfeifer said. "The maturing geological base is starting to rear its ugly head.

This is an impressively researched article. I wonder how long it took the author to put all the data together, and whether there's a book to follow.

The writing is cautious, even tentative. Berenson builds his case in a lawyerly fashion; each time returning to a core theme. We can measure production, we can't really measure reserves. Nations and companies who estimate reserves have immense short term incentives to exaggerate. Production and reserves used to track one another, now they don't.

He's conservative in part because he's getting into "Peak Oil" territory. A google search will show that "Peak Oil" is a bit of lunatic fringe topic; but as is often the case the lunatics have a point. One of my former Caltech profs has written a book on this topic.

Sometime in the next 5-25 years we'll reach "peak oil production". After that demand must fall to track declining production. Barring world catastrophe or technological revolution, demand will be forced down by price increases. Again, barring technological transformation or world catastrophe, we will move into the post-petroleum world. Time to build those bicycle paths. Not, perhaps, a good time to live in a part of the US where water supplies are limited and air conditioning is a necessity.

This article is a sober accounting of a trend that might be the first preliminary signs of "Peak Oil". I'd expect that this will be a passing warning, that production will rise and reserves will be corrected to again track production. Not Peak Oil yet, but rather the first hint of what will come years from now. The Lunatic Frings is again going mainstream.