Chart of the Day: Oil Is Getting Harder and Harder to Find

Oil expert James Hamilton has an interesting summary of the current world oil market up today, and it's worth a read. His bottom line, however, is that $100-per-barrel oil is here to stay:


The chart on the right shows the situation dramatically. In just the past ten years, capital spending by major oil companies on exploration and extraction has tripled. And the result? Those same companies are producing less oil than they were in 2004. There's still new oil out there, but it's increasingly both expensive to get and expensive to refine.

(And all the hype to the contrary, the fracking revolution hasn't changed that. There's oil in those formations in Texas and North Dakota, but the wells only produce for a few years each and production costs are sky high compared to conventional oil.)

In a hypertechnical sense, the peak oil optimists were right: New technology has been able to keep global oil production growing longer than the pessimists thought. But, it turns out, not by much. Global oil production is growing very slowly; the cost of new oil is skyrocketing; the quality of new oil is mostly lousy; and we continue to bump up right against the edge of global demand, which means that even a small disruption in supply can send the world into an economic tailspin. So details aside, the pessimists continue to be right in practice even if they didn't predict the exact date we'd hit peak oil. It's long past time to get dead serious about finding renewable replacements on a very large scale.