Peak Oil

[8/9/06: Mauldin writes about Peter Tertzakian's book A Thousand Barrels a Second: The Coming Oil Break Point and the Challenges Facing an Energy Dependent World] Once peak oil occurs, then the historic patterns of world oil demand and price cycles will cease. In recent years, the realization of price stability has depended on the effectiveness of nations belonging to the Organization of the Petroleum Exporting Countries (OPEC) to adjust for the production increases and lags of the non-OPEC nations.

This is leading to what Tertzakian calls a "break point."

"Although the stakes have never been greater, the history of energy shows that a time of crisis is always followed by a defining break point, after which government policies, and social and technological forces, begin to rebalance the structure of the world's vast energy complex. Break points are crucial junctures marked by dramatic changes in the way energy is used.

"During the break point and the rebalancing phase that follows (which can last for 10 to 20 years), nations struggle for answers, consumers suffer and complain, the economy adapts, and science surges with innovation and discovery. In the era that emerges, lifestyles change, businesses are born and fortunes are made."

[8/3/06] The reason for high oil prices: speculation?

[7/27/06] LONDON (Reuters) -- Oil prices will soar to well over $100 a barrel and stay high as part of a sustained commodities bull run that has another 15 years of life, billionaire U.S. investor Jim Rogers told Reuters in an interview.

"We're going to have high oil prices for a very long time. The surprise is going to be how high it goes," Rogers said.

Reiterating earlier comments that oil prices would hit at least $100 a barrel, he said: "It will be much more than $100 before the bull market is over."

[via Maverick of investwise 7/14/06]

[6/2/06] Is the oil boom over?

[12/18/05] The Energy Department is projecting $57 oil in 25 years (up from their $31 projection last year).

[8/22/05] The term "peak oil" (also known as "Hubbert Peak Theory") was first used by M. King Hubbert, a geophysicist with Royal Dutch Shell (NYSE: RD). In 1956, Hubbert predicted that U.S. oil production would reach a peak between the late 1960s and early 1970s, from which point production rates would forever decline.

Hubbert's prediction proved accurate in 1970, when U.S. production peaked at 11.3 million barrels per day -- a point from which production has been declining ever since. According to the Department of Energy, the United States produced 7.8 million barrels per day in 2003, representing a 31% drop in production from the peak. With oil now at $66 per barrel, there are plenty of "experts" applying the Hubbert theory to say that world oil production is peaking.

[5/2/05] What We Now Know about peak oil