Feeling Really Peaked

Paul Krugman looks at oil, and now I am getting nervous.

There are two basic facts that would seem to explain a lot about what’s happening to oil prices.
First, Gross World Product growth has accelerated — from 2.9 percent in the 90s to almost 5 percent in recent years, according to the IMF. All of this is because of growth in emerging economies, largely China.
Second, world oil production has stalled — after growing around 1.6% a year in the 90s, it’s been basically flat . . .

. . . This is what peak oil is supposed to look like — not Oh My God We’ve Just Run Out Of Oil, but steady pressure on the economy and the way we live from rising energy prices and their consequences. And it doesn’t matter much whether we’re literally at the peak, or whether production can rise by a few million more barrels a day; unless there are big sources of oil out there, we’ll be feeling peakish for the foreseeable future.


It seems quite possible to me that there really still is quite a bit of oil out there, probably most of it at prices well above the production costs we have been used to in the Middle East and elsewhere. That may not change the calculation much - at least not on the scale of decades.

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