I'm skeptical of his plan at the end (tax oil globally at just the right amount to blunt climate change and encourage alternatives without making unsubsidized food-crop biofuels viable) for many obvious reasons, but I see nothing wrong with his points about oil itself.
How dumb does one have to be to use the word "endless" when talking about a very limited resource?
The potential for technology to increase yields and the discovery of additional deposits are nothing new. They were included in the original "peak oil" prediction in 1956 and are part of every serious analysis. The problem is: new deposits are overall not discovered as fast as old ones get used up. Meanwhile the consumption rate has been increasing all the time...
I'm not sure how "dumb" it is to consider the economics of resource consumption/exploration/extraction. On a practical level, the last drop of oil will never be consumed or x resource mined because substitutes develop and markets are forward looking.
While this article doesn't talk about the substitutes specifically, have a look at the availability of natural gas as just an example of why energy prices will go down. What I think they suggest here though is that politics and technology make it more available. Now as for "serious analysis", it's impossible to predict what new technologies will show up in the future as the massive _new_ abundance in natural gas in the last couple years (compare to just 4-5 years ago) shows.
Now consider the emerging technologies that could have a major impact on reducing both cost and carbon dioxide emissions (e.g. thorium, pebblebed, thin film solar, concentrated solar, non-corn biofuels, etc.). To bet that we'll "run out" of oil/peak oil is to place a bet against our ability to innovate and adapt.
> Nearly all instances of "we'll run out of oil" are calls to action to innovate
Hardly. In my experience, most alarmist calls about the finite nature of oil or resource xyz come with it a series of proposals to regulate or "conserve" whereas prices in and of themselves provide incentives to increase supply either through greater extraction/technology or substitutes.
The crux of the conservationist's point is that some resources are mispriced due to uncaptured externalities, and that this leads to overuse.
There's a secondary argument about risk tolerance in that some people default to doing things until proven harmful, whereas others default to not doing them until proven safe, and the whole spectrum betweeen.
But that said, as far as I can tell, the heart of nearly all environmental/energy debates is "is X mispriced?", where X might be gasoline, natural gas, water, trees, or darned near anything else. I'm not sure why you choose to deny that.
----
edit: full disclosure, I believe that decentralization of energy production is important for a number of reasons, and that increased diversity of energy production methods is also important for a number of reasons.
I believe this so strongly that I have invested a fairly large sum of money into a startup that works to make energy costs more transparent, and that works to help entities evaluate and integrate multiple energy sources in an intelligent and cost-effective manner.
Not sure why you're trying so deliberately to be antagonistic. You state conservationists argue resources are "mispriced due to uncaptured externalities, and that this leads to overuse" (or misuse). How do you suppose these conservationists aim to correct these "externalities"?
Obviously they attempt to do more than point out an item is mispriced. Otherwise, their best course of action would be to buy resource XYZ as it's pure arbitrage in which case it is a bet against our ability to innovate and adapt.
edit: I notice you've modified a significant portion of your response and added a disclosure. I tend to agree that the grid will get smarter and we will become more energy agnostic. That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
It's clear you don't know what an externality is, so I'll start there, with a clear hypothetical.
- Q causes asthma.
- I own a factory.
- That factory is cheaper to operate if it emits Q than if it doesn't.
This is an externality.
If I emit Q, I gain profit, and others take a loss, as they have to deal with the medical bills, and reduced quality of life associated with asthma. If I am never forced to pay for this, it's an uncaptured externality, meaning that effectively, I'm paying too little to emit Q.
There's no arbitrage opportunity, the only way to stop me from emitting Q is to find a way to capture the externality. In the United States, this would probably occur either via a lawsuit that attempted to make things right, or I'd simply be stopped via regulation that prohibited the emission of Q at unsafe levels.
The general criticism against fossil fuels is that they have a similar, but harder to quantify issue. Scientists generally agree that changing the atmosphere changes weather and hydrology in somewhat hard to predict ways. This means that whenever you add carbon, you're really increasing the risk of expensive problems. As a simple example, if you raise the ocean level by even a foot or three, there are huge amounts of infrastructure that are suddenly underwater, or that need expensive protection.
Or perhaps the additional carbon causes weather patterns to change in manner that leaves the Dongjiang basin dry. Then a large area is useless for agriculture and industry, and the existing infrastructure is devalued.
But I can burn oil all day, and I don't actually pay for those damages. They're uncaptured externalities. My use of oil is cheaper than it really should be, because it doesn't reflect all the costs.
As such, there's nothing to arbitrage.
* How do you suppose these conservationists aim to correct these "externalities"?*
Generally speaking, the goal is to come up with some sort of estimate on what costs are being incurred to others, and then apply that charge.
An example of a situation where this worked very well was with SO2 in the United States. Sulphur Dioxide emissions were causing acid rain, which caused a number of harms to others. As such, the government set a limit as to the total amount of SO2 that could be emitted, and created a market where companies could bid for the right to emit that SO2.
This encouraged companies to innovate, and find ways to reduce SO2 emissions. It worked incredibly well, costing companies far less than anticipated, and essentially solved the SO2 emission problem in the US, reducing it to levels that don't cause meaningful damages.
That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
You're seeing what you want to see. Markets are not perfect problem-solving devices. The price of oil reflects only the costs to get it from the ground, and the demand to burn it right now. It does not include the portion of the harm that may be accumulate from billions of people burning oil every day for decades.
----
edit: and you see how bad people are with understanding the financial impacts of long-range things all the time. An easy example is to look at how poorly insulated many houses are, even in cold climates. The homeowners could spend $1,000 on insulation and save $600/yr for the next 15 years, but they don't do so, because the true price isn't sufficiently transparent.
I believe your confusion stems from defining what you term a "conservationist". At first you use it to describe someone who worries about peak oil / the finite nature of oil (presuming you understood the original context of the discussion), and later you use it to describe an environmental conservationist - one who is concerned that the costs of resources are underpriced because of the effect on the environment - to which you've helpfully provided examples of strictly environmental externalities.
Markets aren't perfect problem-solving devices - no one has said that they are, however, the regulatory "cure" is often worse than the disease. Regulations are certainly not the ideal way to deal with concerns a given resource are finite. Further, prices are signals in markets that themselves call for market innovation/adaptation - vocal calls for conservation are redundant.
(As a side note: it is also noteworthy however that the drop in sulphur dioxide emissions happened far before the creation of regulated markets suggesting that the fall in SO2 might have occurred irrespective of the regulation - further, from purely an economic efficiency standpoint, pigouvian taxes tend to be more efficient than the added structure of artificial pollution markets. Further, as an addendum to acid rain/"dead lakes" - this was a big concern for Canada until someone noticed that the primary reason the lakes were dead was because of reduced logging and the sediment that it disturbed)
My post was meant to be about uncaptured economic effects and risk.
The "Peak Oil" crowd as I understand them, are concerned that oil field production will stop growing, while demand continues to rise, and the price of oil could grow fairly rapidly, with hard to predict economic effects.
As such, they tend to advocate the development of higher efficiency consumption and exploration of alternative forms of energy while oil is still cheap. It's basically a position that calls on innovation today to avoid a problem altogether, or to soften the blow by laying some groundwork.
You clearly prefer a position where you don't innovate until your back is against the wall, and you mock anybody who does it earlier, and accuse them of not believing in innovation.
"You clearly prefer a position where you don't innovate until your back is against the wall, and you mock anybody who does it earlier, and accuse them of not believing in innovation."
Where is the mocking? Again, the point being that the concerns over peak oil are wholly unnecessary - further to assume that anyone who uses the word "endless" in the context of any finite physical resource is hardly "dumb" as was suggested. Prices create the incentives for innovation - and that's not just when "your back is up against a wall" (any number of cheap emerging technologies being good examples). For someone who doesn't care, you seem terribly emotional and intent on personalizing the issue.
Some people, given the same price curves and risk profiles, will take advocate action sooner than others.
The opinions of those who are later on that curve are not more valid than the opinions of those who are sooner on it, or vice versa.
The people who advocate action sooner do not disbelieve in innovation. They just have different risk and utility functions, and these result in different advocated actions.
I'm old enough to remember quite a few predictions of when petroleum would be so scarce that it would be economically useless, each of which has been proven wrong in turn. There is the distinct possibility of technological change in renewable energy production and distribution coupled with technology change in petroleum synthesis resulting in oil always being available enough for the purposes for which it is unsubstitutable.
I've seen writing from about 100 years ago worried that the world would run out of coal, the dominant fuel of the day, thereby causing the railroads and factories of the industrial revolution to cease.
Whew. It's good to know that if we were wrong in the past on some topic we'll always be wrong.
Oil is not renewable. The crux of the argument for peak oil, as I understand it, is not that we'll run out of oil but that extracting it will become quickly very expensive. And building alternatives, as we already know, is very expensive. So that we'll have a period of time where we'll have a dramatic decline in our standard of living.
It doesn't matter if we'll always have oil if very few people will use it.
The problem is really stated in the article. As prices worldwide goes up the incentive to pump up more expensive sources of oil increases.
However, the price of transporting and fertilizing food is not a cost we really have the luxury of tampering with. 1 Billion people live on a dollar or less, since those same people are very effected by the food price it's them that pay the highest price of dearer oil.
1. Price goes up -> 2. production increases -> 3. supply outstrips demand -> 4. price goes down -> 5. production decreases -> 6. demand outstrips supply -> loop to 1
This is how the cycle has always gone throughout the oil age and how it will always continue until oil is made obsolete.
Oil obsolete? Steps 1 and 6, fortunately, are where the alternative energy advances are always made. While not continuous, they are cumulative (despite occasional attempts to distort this alternative market by incumbent forces).
Ultimately alternative energy will win, the scrappy startups will evolve into fat-cat incumbents, and then their markets will follow the same six-step cycle above, just like oil.
The Haber-Bosch process creates ammonia (a solution that can then be oxidized to create nitrates and nitrites) by passing nitrogen from the air and hydrogen, currently stripped from hydrocarbons, over an iron catalyst. If a "hydrogen economy" were to actually appear this same H2 would be used to produce ammonia (and you could actually cut out several steps in the current process that are necessary to eliminate any trace of carbon monoxide during the conversion of methane into H2, CO2, and water.) If alternative energy can be used to create hydrogen in a cost-effective manner then you are golden as far as fertilizer is concerned.
Two things: There is no peak oil at all, and oil prices are being manipulated as a volatile market for better profits (terrorism, hurricane season, etc)
There are billions, quadrillions and gazillions of oil and gas reserves, only in Saudi Arabia.
wikipedia: aramco
Come back after you read the whole page and understand how hard we are being 'pumped' in the ass by BigOil.
While I'm in no position to comment on the accuracy of the article, being neither an energy analyst or oil industry specialist, I'm getting a bit tired of the vicious ad-hominen attacks in blog comments about articles such as this one. It's ok to do reasoned debate, but calling everyone who disagrees with you 'in payment of big oil' is very childish. This same feature cuts across all climate-change and peak-oil articles on both sides of the argument. You can't win an argument by name calling and shouting, unless you're in the playground with other 5 year olds.
actually you can win by name calling and shouting. If you're side is noisy and unruly enough that the other side backs down you win. You are probably still wrong but you did get your way.
T. Boone Pickens would disagree. In his book The First Billion is the Hardest, he asserts that we've already reached peak oil. His reasoning was that reserves held by oil companies are being depleted faster than new reserves are being discovered. While he isn't exactly disinterested given his investments in natural gas and wind energy, he does offer a unique perspective as a former oilman. Perhaps this is why he stressed the foreign policy benefits of domestically produced energy, rather than the economic ones.
However, the article does show the economic reality of dwindling oil supplies. As easy sources dry up, higher cost reserves become economically feasible. The higher the cost is driven, the more attractive alternative energy sources should become. An all electric car should be an easy sell as long as the range is adequate (~80 miles), and the cost isn't exorbitant (< $40k). They should cost an order of magnitude less ($0.10/gallon equivalent) than fossil fuel powered vehicles to operate and require less maintenance.
> As easy sources dry up, higher cost reserves become economically feasible.
True, but those reserves are higher cost for a reason: they're harder to extract and have a lower production rate. Frankly, it doesn't matter how much oil there is if you can't bring it to market fast enough to meet demand.
Yes it does, because if you can't bring it to market fast enough to meet demand, prices will spike reducing demand. When the prices spike, oil companies are willing to spend more resources to extract oil as quickly as possible in order to sell off their reserves at the highest possible price. This inevitably leads to significantly more supply than demand, and falling prices. At which point capacity is taken offline to prevent oversupply, and the cycle repeats.
If prices are high enough, the market will find a way to extract their reserves fast enough. There could be temporary short falls, but they'll be just that. Should the price remain high, it will give new entrants an opportunity to compete.
Micro-Econ Nit: Increasing prices do not impact demand, rather they have an impact on quantity demanded. Availability of more affordable substitutes such as electronic cars will effect demand.
The argument that quantity supplied of petroleum will continue to rise fails to take into account that at a certain price point, substitute sources of energy make more economic sense.
It's not quite so simple. Higher cost reserves are higher cost because they're harder to extract with current technology. But exploiting such reserves would naturally cause a significant amount of investment in such technology, which would then reduce the extraction cost. The lifetime average extraction cost of what we may call a "higher cost reserve" today may be no higher than other "lower cost" reserves.
The state of the art in the industry is far beyond what it was a few decades, or even years, ago, and that trend will likely continue into the future. Given the total quantity of oil, gas, coal, shale, tar sands, methane clathrate, and kerogen out there, it's not at all unlikely that man-kind may be able to produce fossil fuels for hundreds or thousands of years to come, if there continues to be demand.
Six years back or so natural gas was worth a lot - then all of the sudden there were huge discoveries offshore while at the same time technology improved such that onshore shale formations previously not economical became cheap and prolific. Now natural gas is cheap, cheap, cheap and no one goes around saying we're running out.
Oil is no different. Oil isn't endless, and we are nowhere near reaching peak oil (maybe we have in conventional oil, but even that's debatable). It's really just a matter of how economic it is to produce even the known resources and how well they are managed. Many countries (the bigger oil producing ones) tend to damage access to the resources by producing too fast (due to the discount factor to time/money). There's opportunity to get that back in the future with new technology and time.
To give an example comparing the natural gas situation to oil, Canada is making huge strides in reducing the cost of producing heavy oil, it used to be $50+ per barrel and is now down to $19-33 per barrel. With oil prices at $80 per barrel you can see the profit margin is large enough to make money.
Most oil companies take the majority of profit from oil and re-invest into buying more properties, investing most of it into discovering new resources. They wouldn't be doing that if they thought there was none left to find. Check out the top producers of oil and look at their investments vs. their profits and you'll see.
As a side note... I don't see why much of the oil demand can not be off loaded to natural gas should the gov't + manufacturing companies choose to invest that way. Vehicles can run, houses can be heated, and plants can all operate on natural gas.... Natural gas has proven to be more environmentally cleaner than coal, they even produce less environmental damages than the facilities used to produce electric and corn oil alternatives. So I really don't get all the hype. It's all just market fixing/speculation for the most part and lack of quality information.
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[ 3.8 ms ] story [ 83.0 ms ] threadhttp://www.scientificamerican.com/article.cfm?id=squeezing-m...
I'm skeptical of his plan at the end (tax oil globally at just the right amount to blunt climate change and encourage alternatives without making unsubsidized food-crop biofuels viable) for many obvious reasons, but I see nothing wrong with his points about oil itself.
The potential for technology to increase yields and the discovery of additional deposits are nothing new. They were included in the original "peak oil" prediction in 1956 and are part of every serious analysis. The problem is: new deposits are overall not discovered as fast as old ones get used up. Meanwhile the consumption rate has been increasing all the time...
While this article doesn't talk about the substitutes specifically, have a look at the availability of natural gas as just an example of why energy prices will go down. What I think they suggest here though is that politics and technology make it more available. Now as for "serious analysis", it's impossible to predict what new technologies will show up in the future as the massive _new_ abundance in natural gas in the last couple years (compare to just 4-5 years ago) shows.
Now consider the emerging technologies that could have a major impact on reducing both cost and carbon dioxide emissions (e.g. thorium, pebblebed, thin film solar, concentrated solar, non-corn biofuels, etc.). To bet that we'll "run out" of oil/peak oil is to place a bet against our ability to innovate and adapt.
Claiming it's a bet against that is disingenuous at best.
Hardly. In my experience, most alarmist calls about the finite nature of oil or resource xyz come with it a series of proposals to regulate or "conserve" whereas prices in and of themselves provide incentives to increase supply either through greater extraction/technology or substitutes.
Price systems are natural means of conserving/rationing resources.
1) An incentive to use a preferred technology
2) A disincentive against using an unfavored technology
The basic functionalities of commodity markets aren't questioned by anybody. Implying otherwise is nonsensical.
There's a secondary argument about risk tolerance in that some people default to doing things until proven harmful, whereas others default to not doing them until proven safe, and the whole spectrum betweeen.
But that said, as far as I can tell, the heart of nearly all environmental/energy debates is "is X mispriced?", where X might be gasoline, natural gas, water, trees, or darned near anything else. I'm not sure why you choose to deny that.
----
edit: full disclosure, I believe that decentralization of energy production is important for a number of reasons, and that increased diversity of energy production methods is also important for a number of reasons.
I believe this so strongly that I have invested a fairly large sum of money into a startup that works to make energy costs more transparent, and that works to help entities evaluate and integrate multiple energy sources in an intelligent and cost-effective manner.
Obviously they attempt to do more than point out an item is mispriced. Otherwise, their best course of action would be to buy resource XYZ as it's pure arbitrage in which case it is a bet against our ability to innovate and adapt.
edit: I notice you've modified a significant portion of your response and added a disclosure. I tend to agree that the grid will get smarter and we will become more energy agnostic. That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
- Q causes asthma. - I own a factory. - That factory is cheaper to operate if it emits Q than if it doesn't.
This is an externality.
If I emit Q, I gain profit, and others take a loss, as they have to deal with the medical bills, and reduced quality of life associated with asthma. If I am never forced to pay for this, it's an uncaptured externality, meaning that effectively, I'm paying too little to emit Q.
There's no arbitrage opportunity, the only way to stop me from emitting Q is to find a way to capture the externality. In the United States, this would probably occur either via a lawsuit that attempted to make things right, or I'd simply be stopped via regulation that prohibited the emission of Q at unsafe levels.
The general criticism against fossil fuels is that they have a similar, but harder to quantify issue. Scientists generally agree that changing the atmosphere changes weather and hydrology in somewhat hard to predict ways. This means that whenever you add carbon, you're really increasing the risk of expensive problems. As a simple example, if you raise the ocean level by even a foot or three, there are huge amounts of infrastructure that are suddenly underwater, or that need expensive protection.
Or perhaps the additional carbon causes weather patterns to change in manner that leaves the Dongjiang basin dry. Then a large area is useless for agriculture and industry, and the existing infrastructure is devalued.
But I can burn oil all day, and I don't actually pay for those damages. They're uncaptured externalities. My use of oil is cheaper than it really should be, because it doesn't reflect all the costs.
As such, there's nothing to arbitrage.
* How do you suppose these conservationists aim to correct these "externalities"?*
Generally speaking, the goal is to come up with some sort of estimate on what costs are being incurred to others, and then apply that charge.
An example of a situation where this worked very well was with SO2 in the United States. Sulphur Dioxide emissions were causing acid rain, which caused a number of harms to others. As such, the government set a limit as to the total amount of SO2 that could be emitted, and created a market where companies could bid for the right to emit that SO2.
This encouraged companies to innovate, and find ways to reduce SO2 emissions. It worked incredibly well, costing companies far less than anticipated, and essentially solved the SO2 emission problem in the US, reducing it to levels that don't cause meaningful damages.
That merely goes back to proving the point that the markets themselves create the incentives for resources allocation - ie innovate and adapt and for this reason it has been historically foolish to bet that we will run out of a given resource.
You're seeing what you want to see. Markets are not perfect problem-solving devices. The price of oil reflects only the costs to get it from the ground, and the demand to burn it right now. It does not include the portion of the harm that may be accumulate from billions of people burning oil every day for decades.
----
edit: and you see how bad people are with understanding the financial impacts of long-range things all the time. An easy example is to look at how poorly insulated many houses are, even in cold climates. The homeowners could spend $1,000 on insulation and save $600/yr for the next 15 years, but they don't do so, because the true price isn't sufficiently transparent.
Markets aren't perfect problem-solving devices - no one has said that they are, however, the regulatory "cure" is often worse than the disease. Regulations are certainly not the ideal way to deal with concerns a given resource are finite. Further, prices are signals in markets that themselves call for market innovation/adaptation - vocal calls for conservation are redundant.
(As a side note: it is also noteworthy however that the drop in sulphur dioxide emissions happened far before the creation of regulated markets suggesting that the fall in SO2 might have occurred irrespective of the regulation - further, from purely an economic efficiency standpoint, pigouvian taxes tend to be more efficient than the added structure of artificial pollution markets. Further, as an addendum to acid rain/"dead lakes" - this was a big concern for Canada until someone noticed that the primary reason the lakes were dead was because of reduced logging and the sediment that it disturbed)
The "Peak Oil" crowd as I understand them, are concerned that oil field production will stop growing, while demand continues to rise, and the price of oil could grow fairly rapidly, with hard to predict economic effects.
As such, they tend to advocate the development of higher efficiency consumption and exploration of alternative forms of energy while oil is still cheap. It's basically a position that calls on innovation today to avoid a problem altogether, or to soften the blow by laying some groundwork.
You clearly prefer a position where you don't innovate until your back is against the wall, and you mock anybody who does it earlier, and accuse them of not believing in innovation.
Whatever. I don't even care.
Where is the mocking? Again, the point being that the concerns over peak oil are wholly unnecessary - further to assume that anyone who uses the word "endless" in the context of any finite physical resource is hardly "dumb" as was suggested. Prices create the incentives for innovation - and that's not just when "your back is up against a wall" (any number of cheap emerging technologies being good examples). For someone who doesn't care, you seem terribly emotional and intent on personalizing the issue.
The opinions of those who are later on that curve are not more valid than the opinions of those who are sooner on it, or vice versa.
The people who advocate action sooner do not disbelieve in innovation. They just have different risk and utility functions, and these result in different advocated actions.
Of course, we have plenty of coal today.
Oil is not renewable. The crux of the argument for peak oil, as I understand it, is not that we'll run out of oil but that extracting it will become quickly very expensive. And building alternatives, as we already know, is very expensive. So that we'll have a period of time where we'll have a dramatic decline in our standard of living.
It doesn't matter if we'll always have oil if very few people will use it.
However, the price of transporting and fertilizing food is not a cost we really have the luxury of tampering with. 1 Billion people live on a dollar or less, since those same people are very effected by the food price it's them that pay the highest price of dearer oil.
This is how the cycle has always gone throughout the oil age and how it will always continue until oil is made obsolete.
Oil obsolete? Steps 1 and 6, fortunately, are where the alternative energy advances are always made. While not continuous, they are cumulative (despite occasional attempts to distort this alternative market by incumbent forces).
Ultimately alternative energy will win, the scrappy startups will evolve into fat-cat incumbents, and then their markets will follow the same six-step cycle above, just like oil.
That said, I dont think its a cause for worry right now, but it will be a issue in the future.
There are billions, quadrillions and gazillions of oil and gas reserves, only in Saudi Arabia.
wikipedia: aramco
Come back after you read the whole page and understand how hard we are being 'pumped' in the ass by BigOil.
However, the article does show the economic reality of dwindling oil supplies. As easy sources dry up, higher cost reserves become economically feasible. The higher the cost is driven, the more attractive alternative energy sources should become. An all electric car should be an easy sell as long as the range is adequate (~80 miles), and the cost isn't exorbitant (< $40k). They should cost an order of magnitude less ($0.10/gallon equivalent) than fossil fuel powered vehicles to operate and require less maintenance.
True, but those reserves are higher cost for a reason: they're harder to extract and have a lower production rate. Frankly, it doesn't matter how much oil there is if you can't bring it to market fast enough to meet demand.
If prices are high enough, the market will find a way to extract their reserves fast enough. There could be temporary short falls, but they'll be just that. Should the price remain high, it will give new entrants an opportunity to compete.
The argument that quantity supplied of petroleum will continue to rise fails to take into account that at a certain price point, substitute sources of energy make more economic sense.
The state of the art in the industry is far beyond what it was a few decades, or even years, ago, and that trend will likely continue into the future. Given the total quantity of oil, gas, coal, shale, tar sands, methane clathrate, and kerogen out there, it's not at all unlikely that man-kind may be able to produce fossil fuels for hundreds or thousands of years to come, if there continues to be demand.
Oil is no different. Oil isn't endless, and we are nowhere near reaching peak oil (maybe we have in conventional oil, but even that's debatable). It's really just a matter of how economic it is to produce even the known resources and how well they are managed. Many countries (the bigger oil producing ones) tend to damage access to the resources by producing too fast (due to the discount factor to time/money). There's opportunity to get that back in the future with new technology and time.
To give an example comparing the natural gas situation to oil, Canada is making huge strides in reducing the cost of producing heavy oil, it used to be $50+ per barrel and is now down to $19-33 per barrel. With oil prices at $80 per barrel you can see the profit margin is large enough to make money.
Most oil companies take the majority of profit from oil and re-invest into buying more properties, investing most of it into discovering new resources. They wouldn't be doing that if they thought there was none left to find. Check out the top producers of oil and look at their investments vs. their profits and you'll see.
As a side note... I don't see why much of the oil demand can not be off loaded to natural gas should the gov't + manufacturing companies choose to invest that way. Vehicles can run, houses can be heated, and plants can all operate on natural gas.... Natural gas has proven to be more environmentally cleaner than coal, they even produce less environmental damages than the facilities used to produce electric and corn oil alternatives. So I really don't get all the hype. It's all just market fixing/speculation for the most part and lack of quality information.
http://www.flickr.com/photos/pembina/sets/72157621954583656/