I'm very sad that very important people in mass media don't thing big enough to understand what's obvious. DENIAL it's the word that describes this article.Sad... :(

Florin, Montreal, quebec/canada

The quoted rising OPEC oil reserves in the 80's, these are generally consider to be invented to get round OPEC production restrictions in the late 1980's and was first done by Iraq under Saddam Hussain and then followed by Kuwait, Saudi Arabian and Iran. Within about 5 years their quoted reserve doubled in size at a time when no significant discoveries were made or major new technology had been employed. Their reserve statics have been refer to as paper barrels and are quote by National oil companies with no independent Auditing standards that would satisfy any Western stock markets reporting requirement, these are the Enron of the oil industry. They could make Shell revisions look like a minor accounting error! The other rather unsettling aspect to OPEC reserve statics is unlike the North Sea or North American reserves they never appear to decline even when have been in production for 50 years or so.

William Davison, Nothingham, UK

Here's what Michael Lynch had to say in 2004 at the Society of Petroleum Engineers convention about what the price of oil would do in 2005: http://interface.audiovideoweb.com/lnk/nj45win9664/SPE/qahi.wmv/play.asx

in addition
Future Global Energy Prosperity: The Terawatt Challenge Richard E. Smalley
http://cohesion.rice.edu/NaturalSciences/Smalley/emplibrary/120204%20MRS%20Boston.pdf

Forgotten Fundamentals of the Energy Crisis
http://video.google.com/videoplay?docid=-5051121482067161853

Scott, Gainesville,

I am reasured to learn through this article that (a) there is not and will not be any time soon any shortage of oil (b) oil is actually free, paying for it is just a technical issue and (c) we hardly need it anyway, as our cars planes and chemical industries all use coca cola instead, apparently. So reassured that I am puttin putting half my money into gold.

julia, london,

The economic problem is Peak Oil, which is the end of cheap, conventional oil, not the end of all oil and oil equivalent. Just because there is a resource that may be economically developed at US$80 / bbl does not mean that if you bring it on stream, then oil prices will immediately fall back. As the cheap oil is depleted, the cost base of the more difficult to extract oil becomes a floor price, not a ceiling.

Oil is fungible - low-cost producers don't sell discounted product - they pocket more profit. Once there is 'only' 80 mbpd of $40 oil to be had, and total global demand is 85 mbpd, then to bring the difficult, distant or dirty oil onstream, the global market price must rise to make production of the more expensive sources viable.

If I'm wrong about this, let's just mandate a doubling of North Sea and Alaskan North Slope production, insist on a producer price cap and see if that fixes the problem.

We're in a box. Get used to it. Prepare to use less oil.

Aurictaurus, Singapore, SG

Another reason that oil prices look high is because the $ is weak. In £'s the price of oil has risen but nearly as alarmingly as in $'s. As for the Euro? the price of oil is about the same. The price of oil was $50 at the Euro's inception, but the Euro was woth 83 cents, now the price of oil is $90 plus, but the Euro is worth about $1.42, so why all the fuss. The $ is finding its true low level and every body else is OK? Who cares if American gas guzzlers must pay more? good i say!

Barry Bunn, romford, essex

The debate has really become the one between the economist and the geologist:

Can making investments secure infinite oil resources from time to time ??
Or
Is there a constraint put by Geology and Nature which cannot be overcome by investments??

That is as far as the debate goes, reality on the other hand says that it is difficult to predict the peak and we may only be able to see it in the rear view mirror. The tripling of oil prices in the last 6 years may be pointing to something ominous...
True that some part of the price is the risk premium, but how much, surely not all of it?
Just to add some more fuel to this fire here is a recent article that appeared in New York Times which refers to peak output and decreased future exports from oil producers from around the world:

http://www.nytimes.com/2007/12/09/business/worldbusiness/09oil.html?_r=1&oref=slogin

Amit, Irvine, California

Sadly this authors facts are wrong. According to the IEA, IRAQs exports are now higher than before the invasion. As regards Geopolitical, well there now appears no WAR premium on Iran, since announcing they don't have a nuclear bomb program (and therefore no justification for war) oil has stayed stubbornly above $90.

Times are changing - it is a demand thing. Even threatening recessions don't seem to be affecting demand any more.

Bob Greenyer, Trivandrum, India / Kerala

The trouble with the Peak Oil debate is that it will only be solved once we see it in the rear view mirror. Some say we already can and earlier comments refute the argument made by David Smith. A likely global scenario is simply that oil production will plateau for a time (making peak hard to spot) as suggested in October 2007 by Sadad Al-Huseini, former Head of E&P at Saudi Aramco. The real and immediate issue is therefore one of not being able to meet increasing demand from India and China. "Saudi Arabia can sustain it's capacity for a time but not increase it [as some unrealistically expect]" Al Huseini said. The good news is that would at least give us time to adjust to an even higher energy price environment before the really big oil supply decline comes - and that it will at some point is the only certainty.

Martin, London, UK

You're analysis is dubious. As is often stated, we have used a trillion barrels and known reserves stand at around 1.1 trillion barrels (thats includes canadas tar sands) and at 300 billion barrels use per decade that makes around 30 years worth. Sure at $90 a barrel we can invest more but nearly all of the light easy oil is gone so its gonna cost more to dig/process that 1.1 trillion barrels.

The Arctic etc oil is 4 miles under water and we have never drilled that far as yet so its resources are currently beyond reach. OPECs reserves are inflated too as per the well known 1980's spiked in order to be able to increase quotas.

Oil is going to cost more in the long run and not less.

Pete Best, Northampton, UK

You're conflating terms. World liquids production did beat its all time record this year, but that includes products such as orimulsion (which is partially water) and ethanol (which to some degree is double-dipping.) Crude + Condensate production is still under its 2005 levels.

James, Flagstaff,

No one knows when peak oil will happen, because there's no independent verification of Government reserves across the World.

Opec quota's are based on reported reserves so Opec countries have an incentive to overstate their reserves, and there is no independent analysis.

Alex, Tunbridge Wells,

Before you run out and slit your wrists in despair, I'd like to point out that peak oil is not the end of the world. It's just the end an era. A rather dirty era at that. Would anyone want to go back to living in London at the hight of the Coal era? There are alternatives to oil and the beauty of them is that they actually require less total energy and are far cleaner.

With the rise in the price of oil, the switch to alternatives begins. As I see it, the two main contenders for future transportation fuels at the moment are Natural Gas (which can be produced in a renewable fashion from biomass) and Electricity (preferably from clean renewable sources).

When you burn oil for transportation you're wasting upwards of 80 to 90 percent of its energy in production, refining, transport and wasteful internal combustion engines. Electric cars are over twice as efficient (well to wheels) and they don't have a tail pipe!

Google Smith Electric, Chevy Volt, Tesla or Phoenix Motorcars

Neil, Vancouver, Canada

The most important reason for high oil price is geological constraints.

The simple fact is that consumption is currently four times higher than discovery rate, despite the great incentives the industry has to find new oil fields.

It is of course possible that occasionally monthly world production may exceed previous peak due to several individual producing nations having a good month with no disruptions, but that does not change the shape of the production curve we are in. After rising by 2-3% every year for the past 20 years, oil production has remained virtually static for the past three years. In the next few months, maybe a year or two if we are lucky, world production will start its inevitable global decline. And that, together with the continued expansion of consumption in USA, China, India and elsewhere will have devastating impact on the price-perhaps $200 plus.

Growth is over bar the shouting. We either manage our decline or we live for today and crash tomorrow.

Paul S, Cornwall, UK

1) The figure qutoed for representing 'oil production' is not oil production. It is called 'all liquids'. This includes double counted refinery gains, ehtanol, biofuel. LPG amongst others. The actual crude oil production figures for C+C - crude + condensate have been virtually flat for over 2 years now.

2) In Saudi Araibia the rig count has tripled just to maintain current output, let alone increse it.

3) North sea had peaked, Mexico has peaked, Norway has peaked, Indonesia is now importing oil - it was formally a net exporter, same with the UK, Over 2/3rds of the worlds major producers have now peaked. Gains from other areas ie OPEC must first offset the total production loss.

4) The journalist states the reason for high price is increased demand. Of course it is. Supply meets demand at a given price. This is economics 101. The more scarce a commodity the greater the price.

5) Investment is 200% higher in the north sea that what it was 5 years ago and still declines.

Simon Hargreave, Edinburgh, Scotland

When a curve that has been rising at 1.5-2%/year starts taking 15 months to gain 0.5% it sure looks like a plateau or leveling off to me. Also that number has already been revised downward, albeit to claim that it was November that reached 86.5.

Frank Richards, Marlow, NH

what has totally made you change your view on oil. not so long ago you said oil will be back to $40 a barrel but now you say the world is running out. you have obviously read twlight in the desert with all the oil tech gargone. good to see now that before you cast your opinions on something you are doing a little home work. i think you understand now that oil will be more expensive in the future. $100 a barrel is still very cheap for oil.

michael mckeary, paisley, scotland

like so many proponents of CERA and Lynch - the most obvious point is simply not addressed. No economic solution exists to stop the inevitabilty of depletion. How much more oil will have to be found and extracted to offset current and future cumulative depletion? We somehow imagine that an expert industry that has discovered less and less oil since the sixties will suddenly find a way to reverse that trend and stand depletion on its head.

We should be urgently enagaged with this incredibly serious problem now - instead we waste time on fantasies.

John Lynch, Stroud, UK

Most of us who prescribe to Peak oil production never say half the earth's oil gone. Its seems only those who write dismissively about Peak oil say that. There may be some on the internet who believe that we have actually used half the oil thus the a foothold for Lynch and Yergin and a source for reports like this one.

No, most of us who seriously study this moving target called Peak oil look at many factors and reserves is only one of those. There seem to be no argument from the naysayers that the era of cheap easy oil is over - that gets us on the same page and chapter.

The rate at which the world currently demands oil and the ability to extract it from more complex oil bearing structures , harsher environments, geopolitical realities, aging infrastructure, difficult transport, civil wars, the rate and size of discoveries, vast growth in demand from developing countries and internal use from major exports leaves a production deficient in the coming years. Its the economy.

Terry Backer , Stratford , Connecticut

As I see it, the major problem we face is that without cheap energy, continued economic growth will be impossible. We borrow today, and pay back by tomorrow's growth.

Without this growth, economic collapse in almost inevitable.

What Government wants to "come clean" and tell it's country that it is facing maybe 50 years of continued recession.

I do not see a "techno-solution" to this problem, at best a return to the energy consumption that my grandparents knew.

Life will soon be very different.

Bradley Stoker, Bristol, England

Well, written article but I'm not convinced. To be fair to peak oil theroists they never said oil was running out and this article ignores other obvious facts.

1. To achive a 50% rise in production, yearly increases would need to be about 2 million extra barrels per day each year not the odd 500'000 here and there.

2. An upward or downward trend in anything (in this case oil production) may well see small transient movements in the oppisite direction - as with house prices.

3. Chinas and Indias economic growth requires about a 3% increase in production each year. This combined with fewer oil exports and already declining fields suggest an increase of new production of even more is needed.

4. The higher crude prices have not translated into increased profits for oil companies to invest in new expolration and production development.

5. How come OPECs reserves all doubled in the 80's and have remained static despite constant production?

Paul Roberts, Tunbridge Wells,

The article unfortunately sidesteps many of the concerns raised in A Crude Awakening.
Most astonishing, no mention at all is made of the massive increase in demand for oil from China, India, and other nations as they rapidly industrialize.
If Europe and N.A. can burn up half the world's reserves in little over a century, how long will it take to deplete what's left?
It's not physically running out of oil decades from now that is the concern, it's the psychology of world markets when demand significantly begins to outstrip the supply.

R. Williams, Toronto, Canada

Yeah, plenty of oil to burn, but do we have another home but earth???

ASP, Farmington Hills, MI

Michael Lynch also told us in 2004 that oil would be back down to $25.

Ward Schmidt, Kashima City, Japan