All of this debate, as well-explained as it was, doesn't even begin to scratch the surface of the supply question - which isn't so much how much oil do we have but what kind, and how hard is it to extract? In short, not all barrels of oil are created equal.

For example, light crude oil fields in the middle east are quite shallow and the drilling is very effective - you might not even have to drill a hundred feet to access about 90% of the oil. Recent projections on the existence of vast heavy crude oil fields in Canada (and similar fields in operation in Russia) rely on new extraction technologies requiring exceptionally deep drilling to access a far lower percentage. So whereas an OPEC barrel might cost $20 to produce and is sold at market for $140, the Canada barrel might cost $100 or more to produce. And this still isn't even considering other supply-side questions like development of infrastructure, relative stability, transport costs, etc.

Luckily, the question of how this will affect our cost of gas is answered fairly easily: prices will still go up, as much as possible. No matter how much we've increased supply in the past 30 years - through new technologies, new trading partners, new explorations - have they ever gone down? Maybe it's time to consider that it's just not about supply.

katedc,

Great points here. There's a great whoop-de-do going on about the possibilities of the Burgess shale formation in Montana and N. Dakota, but getting at it is devilishly tricky and devilishly expensive.

I might add, as I said on Best of Fray, that this whole discussion leaves out the important element of conservation.

"... this whole discussion leaves out the important element of conservation."

It also leaves out the overarching element of population growth. Not just oil, but food, water, and sometimes land, are being made scarce by a continuing growth of the world's population. Not only does that growth need to be brought to a halt, but it actually needs to be reversed. I would guess that to live, worldwide, at an average Western European level, we would need to get down to a population of around one billion. Even with a zero reproduction rate from now on, it would take, at normal death rates, something like a half a century to get down to that size. Which probably tells us that there is a good chance that deaths will be stimulated, either intentionally or not.

Good observation by Phil.

However, I'm not very optimistic that human beings are capable of the reason or foresight needed to limit their own numbers -- nature will probably do this job for us, and it won't be pretty.

Cheap energy has also enabled the population explosion by inflating the food suppy and, in general, making life "easier." The expanded population in turn has driven the demand that is now depleting the energy in an ever-increasing spiral.

Imagine someone accidentally dropping 10 lbs. of sugar on the sidewalk near a modest colony of otherwise hard-working ants living at the base of a mulberry tree. The original colony of 10,000 individuals suddently goes crazy, and feeding on the sugar, they grow their numbers to 100,000, and then double that. Life is easy for a while, but then they start fighting with invading colonies of alien ants, and everything gets more complicated.

And then, suddenly, the sugar is gone. The one mulberry tree might support 10 - 20,000 ants, if they work really hard, but no more. Too bad for 90% of the ants.

We are the ants, oil is the sugar. Alternative energy supplies are another mulberry tree nearby, but don't expect any more bags of sugar.

"No matter how much we've increased supply in the past 30 years - through new technologies, new trading partners, new explorations - have they ever gone down?"

Not sure I agree with you on that one. If you adjust prices for inflation, there was a steady drop from the 70's up until 2000. Check out the link.

Of course adjusting price for inflation is warranted. Thanks for the link. But it doesn't show a steady drop from the 70s up until 2000 at all - what it shows is a correction from the hyper-inflation of oil prices in the 70s during the 80s, a significant price spike during the first few years of the 90s following the first gulf war, then relatively stable prices until hyper-inflation again in the 00s. So, it's not so much that by adjusted dollars that they're going down. There are just some times when they're not going up, or even not going up as much.