Executive Summary

• Petroleum is bumping along its global maximum plateau
• Global demand (led by Asia) will soon far outstrip supply
• Why oil is getting scarcer, but cheap oil is already non-existent
• How insufficient net energy will be the mortal pin that pops our unsustainable financial system

If you have not yet read The Really, Really Big Picture, available free to all readers, please click here to read it first.

Global Supply

Where the U.S. shale plays have been getting an undue allotment of press compared to their current and projected flow rates, the major story remains that oil companies are spending more and more as oil becomes more difficult to find and challenging to produce.

What's interesting is that so many people hold the opposite view, perhaps shaped by the breathless manner in which new finds are announced – that is, rarely with an appropriate level of context or caution so that we can judge how significant or likely these finds actually are.

Here's a relatively recent example that captures this dynamic rather well.  Back in 2010, a very exciting discovery was splashed all across the news with some very heady claims:

McMoRan Exploration announced a potentially major natural gas discovery in its operated Davy Jones ultra-deep prospect drilled in the shallow waters of the Gulf of Mexico (commonly referred to as the "shelf"), just 10 miles off the Louisiana coast. 

Positive drilling results could be a huge boom for the company. McMoRan Exploration had proved oil and gas reserves at year-end 2009 totaling 271.9 Bcfe (billion cubic feet of natural gas equivalents), compared with 344.8 Bcfe in 2008.

Estimates of the size of the discovery range from 2 trillion to 6 trillion cubic feet of natural gas, rivaling the largest gas finds ever made in the Gulf. 

(Source)

This is the nature of such press releases, as I now think of them.  Yes, it's exciting that billions of barrels could be discovered and that these finds might produce as much as 6 trillion cubic feet of natural gas.  Unfortunately, a short euphoric sound bite like that is all of the story that every really gets transmitted to the casual reader.  I combat these perceptions constantly in my live Q&A sessions after speeches.