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MARK Twain's advice to investors was 'Buy land - they're not making it any more,' but he might just as well have said the same about oil. With oil prices at records and heading toward $50 a barrel, energy industry veterans are talking about a 'new era' of pricing.

Is it possible, then, that we are about to run short of the source of a third of the world's energy?

Certainly the size and frequency of oil finds is diminishing. The Association for the Study of Peak Oil and Gas (Aspo) forecasts supply will peak in 2008 at present demand levels. If right, it would probably mean high prices are here to stay.

Aspo says governments should be planning for that by encouraging the use of other energy sources and fostering changes in usage.

But Aspo's critics say such Malthusian thinking has always been a feature of the industry, whose history is littered with warnings about the imminent exhaustion of reserves. In 1885, a top Standard Oil executive sold shares at a discount after deciding there was not much chance of replacing declining oilfields in Pennsylvania.

Contrast Aspo's views with the upbeat assessments of the US Geological Survey (USGS), regarded by many as on the wistful side of optimistic, which thinks the world's recoverable conventional resources amount to three trillion barrels.

It adds that there are 4.3 trillion barrels of unconventional reserves such as heavy oil and tar. To put that in perspective, less than one trillion barrels of oil have been produced since the second half of the 19th century.

If world demand over the next two decades grows, as is generally expected, at about 1.6% a year (mainly to meet transport needs), a further 500bn barrels will have been produced by 2020, leaving most of the world's reserves still in the ground.

Similar views are echoed by oil majors. According to BP, at present production rates, oil will last some 40 years, gas nearly 70 and coal almost 200.

'The availability of resources is just not a constraint,' said one senior oil executive. Indeed, several large oilfields are due to come on stream.

And although Opec's stranglehold on production may tighten in coming years, most analysts believe there is scope for a big rise in output outside of the cartel.

'There is a lot of potential for strong growth in non-Opec oil production over the next several years,' said Jim Burkhard, director of oil market analysis at energy consultancy Cambridge Energy Research Associates.

Russia, once it builds new export pipelines, has massive potential to increase supplies which already rival the world's dominant producer, Saudi Arabia. Kazakhstan, where the world's last super-giant discovery, the Kashagan field, was made four years ago, Angola and Azerbaijan are other important future sources.

'The question is not if the oil is in the ground, but about geopolitics above the ground,' says Burkhard.

Exploration efforts are also far from over. Western giants may be struggling to replace the oil they now produce with new reserves, but that is because to a large extent they do not have access to the world's most desirable acreage.

Exploration in the Middle East and the former Soviet Union is far from complete, says Andy Latham, analyst at Edinburgh-based consultancy Wood Mackenzie. 'If you can invest in new infrastructure and exploration in those areas then there's every reason why, for 10-20 years, oil production can increase.'

That explains why most analysts think prices will ease from current highs over time. But in the immediate future, they are unlikely to fall far and analysts are ratcheting up this year's forecasts.

Sabotage in Iraq is a continuing issue and there are concerns this may spread to other key suppliers, especially in the Gulf. Also, some of the world's main non-Middle East suppliers, such as Venezuela and Nigeria, are unstable while the possible collapse of Russia giant Yukos, responsible for 2% of world output, remains a factor.

Aspo president Kjell Aleklett, a professor of physics at Sweden's Uppsala University, says: 'Even if oil supply doesn't peak, as some people say, for another 20 or 30 years, why don't we start trying to solve the problem now?'

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