Falling Oil Prices Prove Peak Oil Wrong
Oil has fallen below $50/barrel. Will it fall further to $40/barrel? Or will it rise again to $75/barrel? Both scenarios are possible. Indeed, both price levels could be reached in the coming year, given the way oil prices see-saw violently.
One thing is clear: the notion that global oil production has peaked and will now fall — a concept called Hubbert’s peak — has been proved wrong. Oil production has been rising steadily, to the point where even a substantial cut of 1.6 million barrels/day by Saudi Arabia has failed to stem the slide in prices.
Some experts have long been bearish on oil. Daniel Yergin of Cambridge Energy Research Associates estimates that world production of oil will rise to 110 million barrels/day by 2015, against today’s output of 86 million barrels/day. If he is right, oil may collapse below $30/barrel again. Yergin’s assumptions have been challenged by most experts, yet his estimates are not completely without foundation.
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