Peak oil nuts may be right, but for all the wrong reasons

I've never had much time for the peak oil prophets of doom. To me they always seemed first cousins to the kind of people who hide out in log cabins in the back hills of Montana surrounded by plentiful stocks of canned food and shotgun cartridges, waiting for the collapse of civilisation.

In a nutshell, they believe the world's oil is running out. They point out that oil supplies are finite while demand appears boundless.

With no major new oilfields discovered in recent years, they argue that the world's oil production is peaking, or even that it has already peaked, and that from now on supplies must decline irreversibly.

Meanwhile, thanks largely to fast-growing car sales in China, India and other rapidly developing economies, demand for oil will only continue to grow. The result, the peak-oilers say, will be soaring prices, economic collapse, resource wars and the end of the world as we know it.

Their basic idea has been around for more than 50 years, and it is sound enough as far as it goes. Logically, if a resource is finite, there must come a day when its production will peak. Unfortunately for the peak-oilers, however, there are some major flaws in their conclusions.

For one thing, they have always failed to appreciate the potential of new extraction technologies. Visiting the Marmul oilfield in Oman in 1990, I was told by one senior engineer that after years of exploitation, the reservoir was exhausted and had no more than a year or two of production left.

More than 20 years later, thanks to enhanced extraction techniques such as polymer flooding, Marmul is not only still pumping oil, its output is actually increasing.