Although oil industry executives still shun the term “peak oil,” a number are flirting with the concept. At the recent Oil and Money Conference in London, Shoki Ghanem, chairman of Libya’s national oil company, said, “There is a real problem that supply may not increase beyond a certain level, say around 100 million barrels [a day]. In some countries production is going down and we are not discovering any more of those huge oil wells that we used to discover in the 1960s or the 1950s.”

Total’s CEO Christophe de Margerie, who spoke at the same conference, told the Financial Times, “One hundred million barrels a day is now in my view an optimistic case. That is not just my view; it is the industry view, or the view of those who like to speak clearly, honestly, and not…just try to please people. We have been, all of us, too optimistic about the geology, about how to develop those reserves, and about how much time it takes…”

Last week in Houston, James Mulva, CEO of ConocoPhillips, repeated a statement about a permanent ceiling on oil production that he first made last spring: “I don’t think we are going to see the supply going over 100 million barrels a day.” (Note: we’re at roughly 85 million today.)

It’s not surprising that these executives have begun to see the light, since many oil companies are struggling to maintain production levels. Comparing year-to-date through September, Mulva’s company is down 80,000 b/d in twelve months, Shell is off 69,000 b/d, BP is down almost 100,000 b/d, and Exxon is down 23,000 b/d. Since 2004, during a three-year period when the oil market was lavishly rewarding new production, Shell is down 18%, ConocoPhillips is down 14%, and BP is off 8%.

Others at the London meeting were equally forthright. Nobuo Tanaka, the new Executive Director of the International Energy Agency, noted that “Despite five years of high oil prices, market tightness will actually increase from 2009. New capacity additions will not keep up with declines at current fields and the projected increase in demand.”

Sadad Al-Husseini, former Vice President at Saudi Aramco, warned that major oil-producing nations are inflating their oil reserves by as much as 300 billion barrels. These hypothetical reserves “are not delineated, not accessible, and not available for production,” he said. He also estimated that the giant fields in the Middle East were 41% depleted, and forecast a “15 year production plateau.” (Writer David Strahan’s excellent interview with Sadad can be heard at

It’s as if, facing the firing squad of $100/barrel oil, some CEO’s, oil ministers, and energy experts have decided to come clean. Still, in some boardrooms, at the U.S. Energy Information Administration, and at Cambridge Energy Research Associates, denial still rules. The last foxhole of the dead enders remains “increased recovery factors,” a phenomenon which, though very real, will have little impact on the timing of peak oil.

According to a report by Dow Jones Newswires, BP’s CEO Tony Hayward is more optimistic than some of his counterparts. In the medium term, he sees oil prices in the $60-$80 range, while admitting that the era of cheap oil is behind us. “We’re very very early in developing and applying new technologies to improve recovery from existing oil fields,” Hayward said, adding that “the biggest source of new oil will come from increasing recovery, as BP has done in Alaska.”

Oh really. If increased recovery is our last best hope, we are in deep pasture paddies.

Tom Standing has followed Alaskan oil production assiduously for 20 years. Asked to comment on Hayward’s statement, he said, “The industry started using tertiary recovery techniques 60 years ago, and EOR now supplies just roughly two million barrels a day worldwide, less than 3 percent of global production.”

“Furthermore, I know of only a single small Alaskan field—Milne Point—where recovery has improved as much as Hayward claims [by 60%],” Standing continues. “Production in the super-giant Prudhoe Bay field is sinking like a stone, and the Cook Inlet fields are declining at 6% annually. As for Hayward’s claim that oil prices are subject to demand-driven cycles, bunk! The major reason why prices gyrated in the past had to do primarily with supply ups and downs, with minor contributions from declining demand. This time there is no supply bailout on the horizon. As Mexico declines and Russia plateaus, prices are likely to steadily climb. As for the notion that prices will return to the $60-70 range, Hell is more likely to freeze over.”

Against this intriguing backdrop, the IEA has just issued its World Energy Outlook 2007. (A summary is at This curious report reads as if were written by a schizophrenic holed up in an opium den. The reader learns that the IEA forecasts a 50% increase in global energy demand by 2030—but then is immediately warned that “the consequences for China, India, the OECD and the rest of the world of this unfettered growth…are alarming.”

In one delirious passage, the IEA forecasts oil demand to reach 116 million b/d in 2030, with output becoming ever more concentrated in OPEC countries, whose output will grow from 36 million b/d in 2006 to 61 mb/d in 2030, while China and India’s imports surge from 5.4 mb/d to 19.1 mb/d. To meet the IEA’s target, OPEC would have to locate two new Saudi Arabias, plus an additional Iran. Good luck with that!

More sensibly, the IEA concludes that “Ensuring reliable and affordable supply will be a formidable challenge. The consuming countries’ growing reliance on oil and gas imports from a small number of producing countries threatens to exacerbate short-term energy-security risks. The emergence of China and India as major players in global energy markets makes it all the more important that all countries take decisive and urgent action to curb runaway energy demand.”

To be fair, the truth is that no one has any clue how the world will meet its energy appetites in 2030. It’s safe to say that energy efficiency and energy conservation have a very bright future. The rest is an absolute fog.

Steve Andrews and Randy Udall are energy analysts and co-founders of ASPO-USA.