Peak oil pundits perplexed by reality

Falling prices do not fit into the theories of those who argue that world production is in irreversible decline

Peak oil proponents and fellow cultists in the climate change camp must be scratching their heads over the recent dip in crude oil prices. If oil production has peaked, its decline irreversible, and global demand continues to rise, why would prices drop?

On the basis of peak oil theory, investing in oil futures should be a no-brainer: Go long until the world ends.


But data released last week by the Commodity Futures Trading Commission showed speculative funds shifting to a net short position for the first time in 17 months. In plain English, traders, whom the ill-informed were quick to blame for driving up prices, are betting oil prices will fall.

Sure enough, the spot price of crude has dropped from $147 US a barrel on July 11, tumbling toward $120 this week, a sell-off of record proportions, or roughly 18 per cent, and the lowest level in more than seven weeks.

Vancouver Sun