Due to the financial crisis and the drop in demand for oil it caused, talk of oil scarcity has mostly disappeared from the news, but the issue will not go away just because of a few years of lower demand.

The question is whether the crisis was the way "nature" found to make us use less of the oil, given that there isn't more to consume, and thus whether we'll run into new constraints as soon as growth attempts to resume. Oil prices at $70+ for the past year and a half would tend to support that worry. And in the meantime, China has grabbed an ever larger slice of the (shrinking) pie...

Wind power

It's sad that the reaction to the oil peak is "it is vital to secure access to oil" rather than "it is vital to change the energy technology we run on"...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

This long term structural setting, deriving from the scarcity of this commodity and growing geopolitical risks (including those of navigation through strategic straits), has been aggravated, in recent years, by what was dubbed "financialization" of the crude futures market, with the entering of financial speculators nicknamed "Wall Street refiners" buying and selling "paper barrels", prompting an additional disturbance in the market, with sometimes "wild" oscillations.

So these German defence futurists are not very imaginative about the present. The bogeyman du jour is the financial speculator and so that's where they pin the blame.

For an alternative view, see (none other than) Luis de Sousa's December 2008 diary Oil prices below 40 dollars per barrel

One of my first dives into the Peak Oil world was with Kenneth Deffeyes' book Beyond Oil. In it the Princeton Professor explains how resources' prices go through chaotic periods in face of scarce supply. Without knowing it, he derived an expression to explain movements like spot Natural Gas prices in the US after 2002, that was equivalent to the Queueing Theory. This made immediate sense to me, after studying this theory in my formative years at the University

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The Queueing Theory shows also another important thing: if the load on the system goes above a certain threshold it becomes impossible to predict queue lengths or waiting times, the system goes into chaos. Going back to the supermarket, imagine that for some reason the flow of costumers increases severalfold over its normal rhythm (e.g. Black Friday in the US). At first, lengthy queues form at each POS, waiting periods then go beyond costumers' patience and they simply start quitting the queue and leaving the supermarket without shopping. The dissatisfaction is such that costumers quit entering the supermarket altogether and the manager is eventually forced to close down some POS. But this is Black Friday, the avalanche of costumers eventually returns and it starts all over again. During this chaotic period a random sample of queue length at any given POS can result in any possible number and becomes effectively impossible to predict.

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Another important aspect to my understanding of this issue was presented by Carlos Cramez and Jean Laherrère in 2006 at the seminar that kicked off ASPO-Portugal. They showed a chart with oil prices as the number of working hours in the US and France and concluded that to return to 1980's levels, the last oil crisis, prices would have to reach something like 125$ per barrel (in 2006 dollars). This number stuck to my mind, and I assumed this would be about the level at which the "boom" would turn around into "bust".

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My mental model of oil prices evolving with scarce supply and expanding monetary mass.

See also ATinNM's regular comments about Feigenbaum's period-doubling cascade to chaos in the logistic model...

By laying out pros and cons we risk inducing people to join the debate, and losing control of a process that only we fully understand. - Alan Greenspan

2010 Peak Oil Report | The Peak Oil Group

Having assessed the systemic changes caused by the global economic recession, coupled with the projected growth from non-OECD countries, ITPOES predicts Peak Oil will occur within the next decade, potentially by 2015 at less than 95 million barrels per day. (In 2008, production levels were 85 million barrels per day.) The study finds that the recession has delayed the oil crunch by two years. This provides invaluable time to plan for a future which will see structural increases in oil prices coupled with shortages and increased market volatility.
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The next five years will see us face another crunch - the oil crunch.
This time, we do have the chance to prepare. The challenge is to use that time well.
As we reach maximum oil extraction rates, the era of cheap oil is behind us. We must plan for a world in which oil prices are likely to be both higher and more volatile and where oil price shocks have the potential to destabilise economic, political and social activity.

Sustainable Energy Security - Research and Reports - Lloyd's

This report, jointly produced by Lloyd's 360 Risk Insight programme and Chatham House, should cause all risk managers to pause. What it outlines, in stark detail, is that we have entered a period of deep uncertainty in how we will source energy for power, heat and mobility, and how much we will have to pay for it.

Is this any different from the normal volatility of the oil or gas markets? Yes, it is. Today, a number of pressures are combining: constraints on `easy to access' oil; the environmental and political urgency of reducing carbon
dioxide emissions; and a sharp rise in energy demand from the Asian economies, particularly China. All of this means that the current generation of business leaders - and their successors - are going to have to find a new energy paradigm. As the report makes clear, we can expect dramatic changes: prices are likely to rise, with some commentators suggesting oil may reach $200 a barrel; regulations on carbon emissions will intensify; and reputations will be won or lost as the public demands that businesses reduce their environmental footprint. The growing demand for energy will require an estimated $26trn in investment by 2030. Energy companies will face hard choices in deciding how to deploy these funds in an uncertain market with mixed policy messages. The recent Deepwater oil spill shows all too clearly the hazards of moving into ever more unpredictable terrain to extract energy resources. And the rapid deployment of cleaner energy technologies will radically alter the risk landscape.

At this precise point in time we are in a period akin to a phony war.

UK Energy Research Centre : Global Oil Depletion Report

Without sufficient investment in demand reduction and substitute sources of energy, a decline in the production of conventional oil could have a major impact on the global economy. In addition, the transition away from conventional oil will have important economic, environmental and security implications which need to be anticipated if the appropriate investments are to be made. While the timing of a future peak (or plateau) in conventional oil production has been a focus of debate, what appears equally important is the rate at which production may be expected to decline following the peak and hence the rate at which demand reduction and alternative sources of supply may be required. In addition, there are uncertainties over the extent to which the market may be relied upon to signal oil depletion in a sufficiently timely fashion.

United States Joint Forces Command - Joint Operating Environment 2010 (pdf)

Energy Summary
To generate the energy required worldwide by the 2030s would require us to find an additional 1.4 MBD every year until then... The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields.

At present, investment in oil production is only beginning to pick up, with the result that production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity.

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.
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A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict. One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char