Is “Peak Oil” Bunk?

NPR continues beating one of their favorite chicken-little memes to death this week: Peak Oil is upon us. Like other things they expect their audience to just accept, such as being in the midst of a global warming crisis and more diversity is always better, they breathlessly report that the world may soon “grind to a halt” due to rapidly declining oil reserves with little pretense that there is a possibility that things…might…just…actually…be…okay.

Now all the breathless talk about crisis is good for book sales and affirming the egos of hybrid driving NPR contributors but I think one will find that actually following the money gives the most accurate picture of the situation. Big shocker: Public Radio’s perspective has little bearing on actual market behavior.

"My guess is virtually 90% of the oil industry is assuming that $70 oil is not going to last more than a few years," according to Adam Sieminski, the chief energy economist at Deutsche Bank (nyse: DB - news - people ). He guesses that most oil companies are projecting crude will fetch $40 a barrel plus inflation over the long-term.

On that score, the oil companies appear to be virtually alone. Wall Street continues churning out predictions of $100 oil. Hedge fund managers are pouring millions into oil futures. And peak oil theorists, who argue that humans have produced nearly half the oil that there is to produce, and that therefore prices will shoot up enough to bring economic growth to a halt, are enjoying their heyday.

"The people most alarmed about future supply are not the people running oil companies," says John Felmy, the chief economist at the American Petroleum Institute, an industry trade group in

In the past, only 10% of oil discovered worldwide ever made it to market, says Jerry Taylor, the director of natural resource studies at the Cato Institute in Washington. But thanks to the march of technology, that portion has climbed to 35%; a move to 40% would create a big increase in new supply. Peak oil theorists have ignored the impact of these technological advances when they have predicted for years that world oil production was nearing its peak. And that is the reason they keep getting it wrong.

Now I think it’s entirely possible that a couple of oil companies could just be behaving stupidly by not investing in greater supply but since the potential reward is so huge if oil prices stay fixed at current levels or greater it seems unlikely to me that all of them would just sit pat unless they had solid reasons for doing so. Either way a lot of people are going to look very stupid in the next few years.

Colbert Roundup

I had forgotten that Steven Colbert was going to do the White House correspondents Dinner, so was pleasantly awaiting it's appearance on You Tube. But, in case you'd rather read about it, Editor and Publisher has a pretty good review of the performance. Oh, and here are some responses to the review, in the forms of letters to the editor (of Editor and Publisher). Funny shit all.

Update: I missed this one (below) which is actually the begining of Colbert's roast-y type talk. This clip gets a little uncomfortable toward the end when the C-Span folks hold a shot on the President for what seems like a minute, and you see nothing remotely like a smile on his digitized face. Watch out Steve.