Analysts who talked about “peak oil” were once derided as fantasists or simpletons. But more people are starting to use this language, even if they do not always mean it in the sense of dwindling reserves in the ground.

Deutsche Bank is publishing research today that focuses more on the idea of peaking demand rather than supply.

If the 20th century was the age of oil, then the 21st will be the age of electricity, says Deutsche, thanks to the arrival of the electric car. Oil demand will peak in 2016 but in the meantime prices will surge to $175 per barrel, again not due to lack of reserves but government-induced distortions in the market.

Deutsche seems to be taking to heart the dictum of Sheikh Yamani, who predicted that as the Stone Age did not end for lack of stones, the oil age will not pass for lack of oil. Technology will make hydrocarbons redundant before we run out of juice. 

Meanwhile, we have had a couple of big oil discoveries in Brazil and the Gulf of Mexico that suggest there is still plenty of oil and gas out there — it is just jolly tough to get it out. If Deutsche is right, much of the undeveloped very deep water reserves and oil sands may never be economic. Christophe de Margerie, Total’s chief executive, caused a storm a couple of years ago when he said that the oil industry would never be able to produce much more than 100 million barrels a day for both physical and political obstacles. Few today disagree.

It is possible to read all of this and conclude that we just have no idea. Deutsche may be right about the impact of the electric car. But the technology of oil extraction is also moving fast, while Opec and the politics of climate change muddy the waters.

In the end, there are plenty of hydrocarbons left in the ground, but only if we want them and if we are prepared to pay for them.

http://business.timesonline.co.uk