2006 energy outlook

Peak oil in 2005? 2006?


Can world oil keep up supply increases of the last 4 years during 2006? (Graphic posted at The Oil Drum, click for complete explanation)

Jonathan at Past Peak alerts me to the annual 2006 Energy Outlook column by analyst Matthew Simmons in World Oil:

Also, 2005 will go down in history books as perhaps the poorest year for exploration success for both oil and gas since World War II. This dismal success was not for lack of effort. Record amounts of funds are being plowed into E&P [exploration & production] capital spending, which is why all the world's rigs are now in use.

So, new oil discovery is petering out worldwide while the industry is utilizing its drilling capacity at nearly 100%. Couple these facts with the important observation at The Oil Drum that May & December 2005 appear to be tied for highest world oil production, with December edging out May because the ``Russians had a very good month''. But the bottom line is that international figures show world oil production roughly at a plateau.

What happens if neither Russia nor Saudi Arabia can increase production much from this point? Maybe there will be a month in 2006 that makes the all-time high. But going forward, this level is precariously perched and a significant fall cannot be ruled out.