Peak Oil Fears Are Not Translating Into Higher Oil Prices

…And here comes the fringe peak oil crowd warning of doom and gloom when it comes to that myth of infinite growth. In fact, the crowd can even now prove that cheap oil production has likely peaked in all but three countries in the world: Kuwait, Iraq and Saudi Arabia.

The immediate assumption is that this should cause oil prices to go up. But hold on to your hats, crude oil prices have actually collapsed.


To understand this, one must go back to 1980 and investigate production and consumption reactions to weak economies. According to the United States Energy Information Administration, consumption dropped 7% from 1980 to 1983 and did not recover until 1987, where consumption rose consistently until now. During the period from 1987 to 2007, consumption rose about 36%.

On the production side, in the period from 1980 to 1983, producers managed to drop production at an even greater rate of demand, by 11%, suggesting that there was significant flexibility at that time. However, in that same period from 1987 to 2007, production rose only 29%, suggesting that production has not kept up with demand since then. This is despite America