In parallel to the recovery, global oil demand will increase next year as mentioned recently by the IEA. This is where the collapse will occur. Global oil production is about to decline, as major oil fields in Mexico and the North Sea have passed their peak… the rate of decline is staggering (check the latest IEA annual report).

Additional energies and non-conventional oils which should have been here do not exist; why? Very simple to understand, with the financial crisis and oil prices back to the low 40s, major energy investments are either cancelled or postponed (they no longer look profitable). In short, when the demand will go up, oil production will be declining; logically prices will explode. Dr. Faith Birol, IEA’s Chief-Economist, well aware of the seriousness of the situation declared on Peak Oil:

What I can tell you is that one day global conventional oil will peak… I think it is going to peak very soon. The main problem here is that the existing fields, many mature fields, are declining.

What is commonly known as Peak Oil, a decline in global oil production is about to happen: you can ignore it, fight it, but to be sure, you will not escape from it. I will not enter into the details of the Peak Oil debate, an endless one. Nevertheless, here are statements on Peak Oil held by some of the most authoritative groups:

Peak oil is at hand with low availability growth for the next 5 to 10 years. Once worldwide petroleum production peaks, geopolitics and market economics will result in even more significant price increases and security risks. To guess where this is all going to take us is would be too speculative.