In 2005, NYT columnist John Tierney bet a large sum of money with Houston oil guru Matt Simmons, on the future of peak oil. Tierney, a peak oil doubter, bet that the average price of a barrel of oil for the year 2010 wouldn’t be $200 or more; Simmons, a peak oil believer, bet that it would be that or greater.
Barring some massive disaster, Tierney’s going to win that bet. Why? Does that mean there’s no such thing as peak oil?
I’d say that’s the wrong conclusion to draw. The world was at or very close to full capacity on its use of available oil … right up to the global economic crash. The slowdown in economic activity caused a dramatic easing of oil demand. Simmons didn’t foresee the kind of economic falloff that the world experienced in 2007 and 2008, and from which we haven’t yet recovered. That doesn’t prove that peak oil is real, of course, but it does offer an explanation for why the price of oil is still dramatically lower than Simmons predicted. If the world’s economy returns to normal, then you’ll see the price of oil go up, because demand will increase to where it was pre-crash, but to my knowledge, supplies have not increased.
(Thanks to reader Peter K. for the link).