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Monday, November 27, 2006

Peak Oil - is it real?

I don't pretend to know - but I'm curious enough to consider the possibility and make up my own mind based on the information available.

Economists are funny people. A lot of them seem to believe that the textbook theory of supply and demand translates perfectly into the real world. The reason I mention this is that there seems to be a belief that when crude oil becomes scarce enough, more drilling will occur, increasing the supply - and there's nothing wrong with that, in theory.

The problem is that in practice we are dealing with a finite resource. Ask an economist about the market for dodo bird feathers is doing, and he'll give you a blank look. Adam Smith didn't live in a world of limited resources - he lived in a world of immature industrialization.

With that in mind I found some fascinating charts regarding North Sea oil production at The Oil Drum. This is very thought-provoking stuff! There is a clear double production peak and decline in spite of frenzied exploration and development effort.

The original posting can be found here. I would have re-posted the charts, but the pix wouldn't show up on blogger for some reason :-(

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