Two barrels of oil are used for each one found. $100 oil anyone?

…The economists said – and still say – there is no shortage of oil; there is just a shortage of oil at low prices. If the price, say, doubles, the reserves will rise accordingly (though not necessarily on a 1-to-1 ratio). Higher prices means expensive reserves, like Alberta’s oil sands, can be commercially produced. Higher prices finance fatter exploration budgets and better oil extraction technology, and lure more talented geologists into the business.

They were right. But maybe the time has come to stop putting so much faith in the economists. As Toronto’s Pollitt & Co. said in an investment note this week: “Just because OPEC [the Organization of Petroleum Exporting Countries] raised output quotas doesn’t mean oil wells will respond.”


In one sense, the peak oil argument isn’t even worth arguing about. Of course oil production will – eventually – decline, plummet perhaps, for the simple reason the planet has run short of the rotting dinosaur carcasses needed to make oil. The better argument is that it scarcely matters whether oil production peaks this year or next if a huge gap develops between demand (rising alarmingly) and production (barely rising or rising not at all). In either case, the price goes up, as it has been, leading to potential economic upheaval or worse.

To Mr. Buckee’s point, some of the world’s biggest oil fields are limping into the geriatric ward. Take the North Sea, the reserve that turned the United Kingdom into an oil superpower in the 1980s, much to Margaret Thatcher’s delight. It was fun while it lasted. Production is falling off a cliff. The U.K.’s oil and gas output peaked in 1999 at 4.5 million barrels a day (a figure that combines oil and the equivalent output of natural gas). Today it’s about three million barrels, a figure expected to decline by 10 to 15 per cent a year. The U.K. is now a net importer of oil and gas.

Globe and Mail