Peak Oil and the Gulf of Mexico
Peak oil is a great theory IF you assume that technology remains static. However, in the presence of technology improvements and higher prices we are going to be finding many millions of barrels of higher cost oil.
In this Business Week article (Plenty of Oil—Just Drill Deeper.) article we see how Matthew Simmons reacts to developments that don’t support his Peak Oil campaign.
SOME ARE SKEPTICAL. Matthew R. Simmons, chairman of an energy investment bank bearing his name and one of the leading proponents of Peak Oil, is sticking to his guns. "One well tells you almost nothing," he says. Simmons says the deep wells are "unbelievably expensive" and often fall short of expectations. "The history of the industry is full of disappointment."
While I agree with much of what he has to say, the fact remains that a very large oil discovery was made in a deepwater frontier. Chalk one up for technology. Peak Oil loses on this one. I’m not a historian but its pretty easy to argue that the industry is full of great success stories as well. A big part of success or failure hinges on the oil price. In a rising price environment there are success stories everywhere. This discovery doesn’t kill the bull market for oil as it will take many years to develop the field. However, another 10 years of this kind of mammoth exploration effort will certainly increase oil supply.