Word: oil
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This isn't quite the same as saying that oil production has peaked and is about to start declining sharply--the view of the true peakists. In "peak lite," as some call it, the big issues are not so much geological as political, technical, financial and even human-resource-related (the world apparently suffers from a dearth of qualified petroleum engineers). These factors all delay the arrival of oil on the market, meaning that production would not so much peak as plateau. But with demand rising sharply, especially from China and India, even a plateau could be precarious...
...that the world is running out of oil. There are massive reserves available in Canadian tar sands, Colorado shale, Venezuelan heavy oil and other unconventional deposits. The problem is that most of this oil is hard to extract and even harder to refine, and it isn't likely to account for a significant share of global production anytime soon. Almost everybody agrees that the pumping of conventionally sourced oil outside the Organization of Petroleum Exporting Countries (OPEC) has already peaked or will peak soon, a reality that even discoveries like the recent 8 billion-bbl. find off the coast...
...question mark is OPEC, which represents the oil powers of the Middle East and a few other big exporters and currently accounts for 41% of world oil production. Every optimistic scenario assumes that this share will rise dramatically in the coming decades. That is, if things turn out well, the U.S. will become substantially more dependent on Saudi Arabia and its neighbors. Great...
Then there's the gloomy view. In his 2005 book Twilight in the Desert, energy-industry investment banker Matt Simmons opened up a still raging debate over whether Saudi Arabia, OPEC's top producer, really can pump much more oil than it does now. Since the book appeared, Saudi output has dropped from 9.6 million bbl. a day to 8.6 million, despite rising prices...
...they don't. So far, the answer from OPEC leaders has been that high prices are the fault of speculators and the falling dollar, not low production. They're not just blowing smoke. Lynn Westfall, chief economist of refiner Tesoro Corp., says there's more than enough oil for sale right now. The price pressure, he explains, "is coming from financial participants in futures markets...