Oil price stability heralds new "equilibrium"

…The panic about “peak oil” seems to have receded. It has been evident for some time the total hydrocarbon reserve (including natural gas and coal, as well as shale oil, bitumen and conventional oil from unconventional fields or enhanced recovery methods) will provide plentiful energy into the distant future. The question is engineering and price not physical availability.

But there is now an increasing recognition that demand itself will peak. Crude consumption in the OECD economies has already peaked and is unlikely to exceed 2007 levels in future. But senior policymakers and executives are now starting to talk about a global demand peak sometime between 2020 and 2030 as emissions controls and energy efficiency programmes bite into demand in emerging markets as well as the advanced economies. 95 and 110 million barrels per day (compared with around 85 million currently). “World demand will peak before its supply because there is plenty of oil in the world, there really is,” he said in an interview on BBC Radio 4.

As the peak oil panic gives way to a more nuanced view, it removes one of the factors underpinning the expectation of ever-rising real oil prices that drove the 2008 price spike and the more ambitious forecasts about price increases in the next 5-10 years.

Reuters