as better technology reduces the cost of producing energy from nonconventional
sources, alternative fuels will gradually become economically
viable and may present investment opportunities. But until we
reach that point, oil will continue to drive the planet. So if there’s anything
you’d want to get from this book, it is this: Tightening supply
and demand for oil and other fossil fuels will nudge oil prices ever
higher, creating perhaps the greatest opportunity for investors to acquire
wealth in the new millennium—the equity ownership of the
world’s dwindling hydrocarbon.
“Saint” Hubbert to Disciples: Go Ye and Spread the Gospel
The current debate about oil peak is quite interesting. Because Hubbert’s
prediction came to pass, he became a patron saint among oil peak advocates.
But most of his opponents have switched their argument. It’s now
not a question of whether he was right, but of how his theory applies in a
global context. Does Hubbert’s Curve matter in the wider global oil production
matrix, and even if so, have new technologies not made his theory
irrelevant?
Yet, some experts now agree that even taking all these issues into consideration
does not change the central basis of Hubbert’s argument: that
oil is a tangible, finite commodity that must come to an end some day.
What’s really hard to pin down is when exactly we may run out of oil.
There are many wild guesses that fall into two categories: Most economists
who dispute the oil peak theory present the best case scenario, arguing
that if it happens at all, then it could be 30 or 40 years away. On
the other hand, independent geologists who support the theory, the socalled
disciples of Hubbert, present a very bleak scenario, suggesting that
the peak could be as early as 2008.10
The two most prominent disciples of Hubbert are Colin Campbell
and Princeton University geologist Kenneth S. Deffeyes. The oil industry
calls them pessimists because they are predicting “a permanent state
of oil shortage.” Of the two, Deffeyes is the greater pessimist because he
argues that maybe in 2007—almost certainly by the end of the decade—
the world’s oil production, having grown exuberantly for more than a
century, will peak and begin to decline.11 Matt Simmons, a banker in
Houston who knows much about the oil business, believes we are at peak
already in 2006. After that, it really will be all downhill. The price of oil
THE END OF AN ERA? 33