Dust off those survivalist manuals and brush up on your dystopias: Peak oil is back.
Always tougher on the way down (AP)
Global production of petroleum peaked in the first quarter of lastyear, says analysts Raymond James, which “represents a paradigm shiftof historic proportions. Unfortunately, mankind better get ready tolive in a peak oil world because we believe the ‘peak’ is now behindus.”
Raymond James’s notes that non-OPEC oil production apparently peakedin the first quarter of 2007, and given precipitous falls in oil outputfrom Russia to Mexico, there’s not much hope for a recovery. OPECproduction—and thus global output—peaked a little later, in the firstquarter of 2008, Raymond James says.
The contention rests on a simple argument: OPEC oil productionactually fell even as oil prices were above $100 a barrel, a sign ofthe “tyranny of geology” that limits the easy production of ever-morecrude.
“Those declines had to have come for involuntary reasons such asthe inherent geological limits of oil fields … We believe that the oilmarket has already crossed over to the downward sloping side ofHubbert’s Peak,” the analysts write.
If true—and the analysts note that true historical peaks are onlyvisible in the distant rear-view mirror—then expect oil prices to jumpback toward triple digits. All the more so if demand recovers—oil hasclung to the $50 a mark even as demand cratered everywhere.
Now, there are signs of some green shoots out there. The Chineseeconomy seems to be responding to the government’s almost $600 billionstimulus plan. The CLSA China Manufacturing Index showed a big jump in April and the first expansion since last July.
Crude oil futures are up about 1% to $53.70 today.