Quote Originally Posted by Ulenspiegel View Post
We have a stagnating global production since 2005, OTOH the demand of India and China, which buy more despite increasing prices, increased, the domestic consumption in most producing countries increased.
Declining oil production is not sufficient of itself to determine whether production is in irreversible decline; or to prove that high oil prices are here to stay. There are two problems: first, the oil market in general is not stable; prices and production constantly cyclical rise and fall. There are at least four previous eras in which production appeared to peak, but was only followed by an oil glut and collapsing prices. The second problem is that the oil market is now dominated by speculation, which is driving up prices despite slowing demand. 2005 saw what Daniel Yergin termed a demand shock, where the simultaneous tightening of capital investment in oil production and market contraction (a response to the unexpected oil price collapse in the 1990s) collided with growing consumption in the developing world. This has stressed global spare capacity, with the consequent rise in prices encouraging intense speculation and more rising prices (the inflationary pressures of the GWoT, Iranian confrontation, and instability in Nigeria don't help matters either). And now more cynical than in the 1990s, oil producers are not about to rush to increase production without significant external pressure. Sustained high prices produces countervailing forces (increased production, reduced consumption) that will eventually dry up investment. This is already happening (high oil prices partly contributed to the 2008 recession as trillions of dollars of wealth was transferred from consumer-intensive modern countries to savings-focused third-world producer governments). Governments around the world are taking alternative energy seriously. And the oil market is throwing billions of dollars into exploration and production. We may or may not be transitioning from an economic dependency on oil (it's hard to say), but we are definitely not in some world ending peak oil crisis.