The return of Peak Oil

If you thought that the slump in crude prices from their $147 per barrel zenith last July spelled the end of ‘peak oil’ theories, think again. One US brokerage thinks that, far from approaching the mythical peak, we are in fact already past it.

Peak oil is the notion that the rate of global oil extraction is nearing the absolute limit of what its geology can support, and that declining production is inevitable thereafter. The inference is that new demand from the likes of China and India spells rationing through permanently sky-high prices.

But Marshall Adkins, analyst at Raymond James, thinks the peak was last summer. He cites the behaviour of Saudi Arabia as evidence. The kingdom, which dominates Opec, can usually be relied upon to open the spigots in response to soaring oil prices, as it did in 2005, when oil hit $70 per barrel.

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