--- Wojtek Sokolowski <sokol at jhu.edu> wrote:
> As I understand, "peak" is not just the supply-side
> phenomenon, but above
> all, the demand-side one. You may have a peak
> effect when supply grows
> slower than demand.
>
> The current peak argument, as I read it, is not that
> supplies are dwindling
> but that growth in demand outpaces growth in supply.
The latter part is what's expected to make $100 barrels, etc. The peak is the expected slowdown and reversal in the growth of total extraction. That's derived from the aggregate behavior of individual oilfields -- first it's easy to pump it out, then as the reservior gets low it slows down. That's because the oil is not sitting in a big pool underground, it's in porous rock. It's been compared to sucking on a straw stuck in a wet sponge, which might illustrate why extraction for a single well or field might slow down.
The story is that there's always been excess natural capacity, so that the bottleneck has generally been in investment in infrastructure, the odd embargo, and cartel pricing. There's always been the ability to pump oil at a greater rate to fulfill demand, provided that the infrastructure is there. Otherwise there would be no point to a cartel, right?
The exploding price argument comes in when oil producers lose the *physical* ability to sustainably keep up with demand (which has been rising for some 100 years) and keep the prices stable. It just gets harder to pump out, as well as to find new sources. And it's not that it's about to run out, it's harder to sustain the rate of production.
I don't think the peak theory is in serious dispute. It most famously predicted the peak in US oil production around 1970. More shadowy is when it would happen for worldwide production, hence the estimates from 2004 to 2037 or whatever.
As far as whether current prices reflect the peak, I really wouldn't know. I can't imagine sabotage in Iraq is not a factor. But I understand that some OPEC producers have been not meeting their quota, which they ususally overshoot. And the Saudis and others are supposed to have an incentive to keep prices reasonable by some measure, since high prices encourage conservation and gum up economies, depressing demand.
This is a article from Scientific American by Colin Campbell, who is a big peakista. It explains the peak idea and sums up why he guesses it's is around now. Yes, the website is griding axes, but it's a good article.
<http://hubbertpeak.com/_archive/ScientificAmerican199803/EndOfCheapOil.htm>
Andy
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