The majority of today's oil bulls fall into a camp composed primarily of alarmists and doom-sayers, and during any measured discussion of the supply/demand balance, they cite peak oil theory as the key tenet of their bullishness whilst ignoring the counter-factual evidence.
Peak oil theory, in its most updated form, was promoted by a scientist who spent much of his time with Shell as his benefactor (1943 - 1964). He predicted world production would reach a peak in 1995 (which it did not of course, and the date keeps getting pushed back). The oil-bulls continue to bet that the oil industry may at some time in the future struggle to meet a growing demand for oil. For this conclusion, they not only ignore the evidence so far, but also project future demand largely by extrapolation of oil consumption patterns over the last fifty years, without accepting any room for discontinuities. Yet discontinuities are the most likely outcome given the range of available technologies today and politics of energy security in the world's largest economies.
It may be instructive to recognise that every few decades, since the 19th century the world has witnessed a dramatic shift in its primary energy source. Until about the middle of the 19th century, wood and animals were the dominant source of energy. The advent of the industrial revolution shifted our fuel source to coal. Around the beginning of the 20th century, oil commenced its rise to the current widespread use, not a little helped by the marketing prowess and lobbying by the powerful voices belonging to a significant oil industry based in the US. From the 1950s there began a process of greater diversification as natural gas, nuclear, and hydro-electrics and other energy production techniques brought in new and cleaner sources of energy. This diversification perhaps might have been quicker and more advanced today, were it not for the powerful voices intent on retaining oil's relative dominance.
With its deep pockets and the help of "well-oiled" politicians, Big Oil has managed to maintain oil's relevance as a meaningful alternative in the energy landscape for longer than it deserves.
But can this continue? As the world economic order continues to shift, the stark reality which will dawn on the industry is that the five largest and most influential economies in the world today (and remaining so over the next ten years: US, China, Japan, India, Germany), who contribute to over 1/2 of the world's GDP, will all be net oil importers with net imports accounting for somewhere between 60% to 100% of their oil needs. Most of the oil reserves in the meantime are located in parts of the world with sometimes extreme cultural and religious disharmony with those same economies, their biggest customers. The voice of the Texan lobbyist putting the case forward to maintain oil's important economic status is likely to fall on increasingly deaf ears in the US and elsewhere today. And world is certainly not going to take lessons from Iraq or Iran on energy policy. Certainly not when their main export costs somewhere between $80-100 a barrel.
The evidence, therefore, for robust political and economic reasons, points to the world being at the cusp of next big shift in energy production and consumption. We may or may not be close to peak-oil but we are past peak big-oil.
Extrapolating the consumption patterns of the last fifty years will not help. Shifts by their nature are often discontinuous. Speculators who count on handsome rewards for betting on an ever increasing oil price, may soon find, like so many other markets and brokers of those markets, who welcome their cash, past performance can be prove to be a poor guide to future performance.