The “peak oil” point will inevitably be reached, and the concern is legitimate. The extensive discussion of “peak oil”, however, may distract from equally legitimate and far more immediate concerns.

We all know that the easy oil has already been exploited, and that future capacity increases will require very large investments, high production costs, and extended time lags between investment and production. In theory, high oil prices should provide both the means and the incentive to support these investments. In practice, investment is far lower than it needs to be to support probable increases in demand.

National oil companies in many oil producing countries are managed according to political, not economic, rationales. In many cases political and social projects receive priority when oil revenue is allocated, and investment in oil production is often insufficient even to sustain current production levels, let alone to bring new capacity into play. In theory private investment should be able to make up the gap, but very large investment requirements, extended recovery horizons, very high levels of political and conflict risk and generally inhospitable investment climates in areas with high potential are major obstacles to private investment.

High oil prices should drive a wave of investment, but non-economic investment constraints have distorted the process and reduced investment to a level that may not be sustainable. A very high proportion of current investment in new capacity is in the GCC, which only increases the current global dependence on a single group of producers located in an area subject to very real security threats.

This investment gap actually delays the onset of the “peak oil” point, as it leaves more oil in the ground. It also creates problems of its own. I’d hazard a guess that the next great energy crisis will not be driven by an apocalyptic “peak oil” scenario where the oil simply runs out, but by a combination of increasing demand, reduced output due to insufficient investment, and political and/or conflict-related disruptions in one or more major producers. This is not as dramatic a scenario as “peak oil”, but the potential security impact could be severe and the probability of such a scenario appearing in the short to medium term is quite high.