Is Peak Oil Dead?

Longtime readers of the site and listeners to the show will know that the founder of Financial Sense, Jim Puplava, has been a regular proponent of peak oil since 2002, when oil prices were trading around $20/barrel. Now that oil has fallen in half from its $100+ range in place over the past few years, many have written us wondering if Jim has changed his views. That is, is peak oil now dead?

In last Saturday’s Big Picture, Jim goes “on the record” by saying no, he doesn’t think peak oil is dead, though it has clearly been pushed out further with the massive increase in US shale production and deceleration of global economic growth.

This, and the unwinding of massive long positions in the crude oil market, have likely exacerbated the downtrend and led to momentum selling. Though oil could move lower and possibly reach the low end of Jeff Rubin’s $40-$60 range predicted last year (see here), Jim does not believe these levels will be sustained over the long-term.

To listen to his full remarks on the oil market, stocks, and more, click here to access Jim Puplava’s Big Picture: On the Record (Part 1).

Historical note: Starting in February 2002, Jim Puplava made a very strong case for a long-term investment into oil and energy through a series of articles titled Powershift: Oil, Money, and War. The basis of that series was to highlight three large-scale shifts (and their likely consequences) in the years ahead. The first was a long-term rise in the price of oil; the second trend was related to money and focused on a devaluation of the U.S. dollar; and the third was, in the aftermath of 9/11, the growing prospect of war and geopolitical unrest, particularly in the Middle East.

After the first installment of Powershift, many of these themes played out with unexpected accuracy: for the next six years the price of oil rose over 600% before peaking in 2008, the U.S. dollar saw a 40% drop in its value over that same time, and a year later the U.S. invaded Iraq followed by long protracted wars throughout the region ever since.

Though oil, money, and war are highly interwoven affairs, the main thrust of Jim’s 2002-2007 Powershift series was to show that the economics of oil had changed and that depleting oil reserves, or “peak oil”, meant low energy prices were a thing of the past. His forecast proved timely. In February 2002, oil made a significant long-term bottom at $20/barrel—a price we may never see again.

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