Is oil supply at its peak?

Some market watchers say the end of increases in conventional crude output already at hand

It’s the summer of 2006. Osama Bin Laden warns the United States against becoming involved in Somalia. Mexicans elect a new president. And the international community strongly condemns North Korea for its testing of long-range missiles.

But only one event during this time could go down in the history books as forever changing the course of industrialized economies. The summer of 2006 is when the average amount of crude oil pumped out of the ground reached about 85.7 million barrels a day, according to the International Energy Agency.


That, say many followers of “peak oil” theory, is about as good as it’s going to get.

And with spot oil surpassing the symbolic $100 (U.S.) mark yesterday for the first time, before easing slightly to close in New York at $99.62, more market watchers are asking: Has global production of oil hit a wall?

“You never know you’re at peak until after the fact,” says Jeff Rubin, chief economist of CIBC World Markets.

But with 18 months behind him, Rubin is increasingly convinced the days of easy, plentiful oil are gone. Even if December data show record production in the fourth quarter of 2007, there’s growing consensus that, at the very least, oil supply has reached a plateau.

“I just don’t think we’re going to see increases in conventional oil production any more,” Rubin says. “I think (peak oil) is here.”

Toronto Star