Is there a peak oil problem?

I’m not a geological expert, so I can’t speak to the truth of Mr Lynch’s assertions. Even so, there is reason to be sceptical of his conclusions. Relative to the real oil prices that have prevailed for most of the past 40 years, $30 per barrel is fairly cheap—cheap enough to allow people in rapidly developing nations like China, and India, and Brazil to take up driving. At present, the average American uses nearly 25 barrels of oil per year. The average Briton uses roughly 11, while in China the average is 1.9 and in India 0.8. As China and India grow richer, we can expect their per capita petroleum usage to increase, particularly if oil prices remain low. Given the populations involved, usage doesn’t need to grow by very much at all to boost global oil consumption significantly.
Currently, there are about 6.7 billion people in the world, who use about 4.8 barrels of oil per year each, for about 32 billion barrels per year. By 2020 there will be nearly 8 billion people. If oil prices remain low, it’s reasonable to expect per capita consumption globally to rise to perhaps 5.5 barrels of oil per year each by then. That would give us an increase in annual global petroleum consumption of nearly 40% in a decade’s time. Does it seem reasonable that global production can expand at even half that pace using only supply that can profitably be withdrawn at $30 per barrel?

Perhaps so, but I have my doubts. The simple fact is, at cheap prices, the billions of people in emerging markets will consume a lot of oil, and billions of people can’t consume a lot of oil without global production ramping up faster than it has at any time in the past half century. The only way to prevent large growth in petroleum use in rapidly developing nations is for prices to make such growth unattractive. But that implies prices that are high enough to bite in petroleum-thirsty countries like America.

The Economist