Well, many said it was not oil but rather a corrupt, fraud ridden banking system and all the "instruments" they were pedaling as derivatives. Still, it was interesting that conventional crude oil peaked at the same time. If I recall, the world was producing some 86 million barrels a day and was rumored to be pumping full out. It is also well known that oil, or liquid fuels, drives our economy and without it, there would be some disruptions in the way we do business, maybe with volatility or maybe a "crash". It was also suspected that the world economy could not live with $100 oil.
So time went along. Oil did a big dip to about $30 and then finally settle out 5 years later at the magic $100 or so. We are talking WTI here not Brent which tended to run at $120 or so. This $100 range prevailed for quiet some time but recently fell below $50 and seems to be lingering.
What has proved to be interesting is that the economy never recovered. It is true, we were told it was going better but in reality the world has been a mess as can be seen most clearly in Europe where recovery has not happened. In truth, as the graph shows, in the USA the only industry that was doing well was the fossil fuel sector. The rest of the economy during this $100 oil days has really not recovered. This has been pointed out by many economist but generally the narrative has been controlled by the government optimist and big corporations. The attitude has been talk it up enough and eventually every body will spend and the consumer economy will be growing like cancer on a bad organ.
So why talk about peak oil again? Couple of things. It turns out the economy can not live with $100 oil and it never recovered. In fact, things have been deteriorating even tough rich (? relative) people like me, have really not noticed it--the church parking lot is plumb packed with big, new cars every Sunday. But the periphery, the less fortunate, have been suffering---Detroit, Camden NJ, on and on.
Then oil drops to sub $50 while some cheer for the cheap $1.75 gasoline and such, But in the process the oil industry starts shutting down well drilling, some expensive production and lots of exploration and development. Opp! The claim is there is too much oil but in reality the demand has gone down because of the previously-mentioned continued recession.
There is, of course, more of "liquid fuels" being produced and it it is now up to 90 million barrels. ALL of the new production is in North America (US and Canada). all of it. The rest of the world is in decline (grapth). Here is the big deal, we are now shutting in our oil and some drillers are starting to go out of business. This means that US production will shortly begin to decline as will the tar sands of Canada. Once they go down, world wide production will also begin to decline.
Couple of big questions: If the total liquids (oil, condensate, ethanol, frack oil) production drops off to say 88 million barrels a day, will it be possible to ever get it back to the high of 90 million a day. While drillers are shutting down, the rest of the world's output is declining and there will be a bigger gap to over come. When one considers that the frack wells decline by at least 40% each year, things look a little odd. Will there then be a shortage once production hits demand? Will oil then shoot to $150 a barrel? And if it does will that cause a deeper recession? And then another fierce drop in price? Tell me peak oil is not an issue! Will drillers give up for lack of profit? What about the geopolitical issues? What about the banking system that has never been fixed. What about the geology were the easy-to-get oil is all gone? We do live in interesting times.
Interestingly, the only dip in emission we have had in years, occurred in '08 right after the crash of the banking system and the economy---and $147 oil!.
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