As I’m sure you’ve noticed by now, gas prices have fallen back from the phenomenal highs of last summer. The immediate cause has been the economic crisis. When credit markets seized up, some companies that wanted to buy oil simply couldn’t get the cash. And perhaps more importantly, the economic slowdown has decreased projections for oil demand. Markets that seemed tight are now looser than they’ve been in a while.
But those changes are just on the demand side. On the supply side, though, little has changed. If anything, the outlook for oil supplies is somewhat more pessimistic than it was a few years back. Take a look, for example, at this recent survey of petroleum geologists (pdf link), that was conducted at a recent professional convention and reported in the journal of the Society of Exploration Geophysicists. Three out of five petroleum geologists surveyed believed that global oil production would “peak” within 10 years. See below:
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For those out there who aren’t familiar with the concept, an oil supply “peak” is the point at which global petroleum production gradually declines, never to return to its previous highs. US oil production peaked in 1972, ushering in decades of growing reliance on foreign sources of petroleum—along with all the international and economic entanglements that’s entailed. Many predict that a worldwide peak in oil production will cause even more turmoil than the US peak has.
Perhaps surprisingly, then, more than one in ten petroleum geologists surveyed believe that the peak has already occurred, but has been masked by delays and ambiguities in the international production data. On the flip side, only fifteen percent of respondents believe that global peak is more than two decades off.
This is really quite remarkable. Just a few years ago, the conventional wisdom—at least, the wisdom that we were hearing from major oil producers, top energy consultants, and international energy agencies—held that the peak was many decades in the future. Apparently, professional petroleum geologists now feel free to speak their minds—and are saying that a production peak isn’t far off at all.
The geologists may be wrong, of course. But trying to outguess the considered opinion of well-informed scientists is a sucker’s game. So no matter what oil prices do in the short term, we’d be wise to prepare ourselves for tightening oil supplies, and higher oil prices, in the not-too-distant future.
[Hat tip to Wayne Suyenaga—thanks, Wayne!]