Feeling Peak-ed (III)

Is peak oil really here this time? Not very likely, perhaps, and probably only ARAMCO, if anybody, really knows, but it sure looks like the age of big production growth may have ended. Does this mean that the long cycle of boom and bust in the oil industry is over? Probably not, but it's hard to believe that we will see much cheap oil anytime soon.

Anne-Louise Hittle, of Wood Mackenzie, added that investors were shifting their focus from the short-term to the medium-term, where supply fears played a bigger role. Since January, long-term futures oil contracts, such as those for delivery in 2016, have jumped almost 60 per cent, while near-term prices have gone up 35 per cent.

That trend was exacerbated by T. Boone Pickens, the influential investor who believes world oil production is about to peak as aging fields run dry. He warned that oil prices would hit $150 a barrel by the end of the year.

“Eighty-five million barrels of oil a day is all the world can produce, and the demand is 87m,” Mr Pickens told CNBC. “It’s just that simple.”

Mr Pickens’s view is still in the minority in the oil industry. But concerns over future oil supplies are fast moving into the mainstream and influencing investors.


The US, with our addiction to cheap oil and profligate ways, are likely to feel quite a bit of pain. If we are smart, we will use this time to promote energy efficiency. Signs to date are not especially promising. See for example, the gas tax shennanigans recommended by Clinton and McCain.

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