Peak oil tanks
Among the casualties of the global economic slowdown and the attendant oil crash is the theory of peak oil, which stated that the world was about to run out of oil altogether and that its price would therefore continue to rise into the stratosphere. Reality bites again.
The Financial Post’s Terence Corcoran reports.
As it turns out, the opposite has happened. Oil traded at $43.72 yesterday. Philip Verleger, of the Haskayne School of Business in Calgary, said yesterday that oil could go to $20 a barrel as the economic slowdown drags on through the next year or more. Price recovery could take few years, before oil returns to “normal” levels.The question now is: What’s normal?
The list of big-name economists, commentators and forecasters who hung their hats — and their investment plans — on variations of peak oil theory is too big for this page, but some day somebody should post it prominently for all to see.
Mr Corcoran sings the praises of “one of Canada’s greatest unsung academics”, Vaclav Smil, Distinguished Professor of Environment and Geography, University of Manitoba, and a long-time critic of peak oil theory. Prof Smil’s latest book is Oil: A Beginner’s Guide.
The long-term trend of oil prices suggests that recent highs can be attributed to an inflationary bubble, not a diminishing supply of oil.