Since we can use human waste to produce hydrocarbons, it's hardly a relevant distinction. In theory, we could develop hydrocarbons as long as there is a planet earth. Once we use that up, demand disappears as well because there is no planet. I know it's a ridiculous example, but it's just testing at the limit for illustrative purposes.

This may be true, but accountants don't create oil. They only account for it. What you say here was true of U.S. production, and it peaked and declined as a matter of fact.

Martin, how do you think they came up with the reserve numbers for U.S. peak oil? The very same accounting techniques.

Credible authorities claim that conventional production (excluding heavy oil reserves like Canadian tar sands) has already peaked.

Even if very credible authorities are of the opinion that conventional oil has peaked, there are plenty of credible authorities who refute them with equally good arguments. It is incredibly hard to make predictions in this industry – and I think this is a very under appreciated fact. Opinions (even the opinions of experts) are like assholes – everyone has one and even experts can be wrong.

The rising price and a rush to increase production may only further deplete reserves, making the decline steeper when it occurs.

By definition, this is untrue. If a higher price is required for secondary and tertiary recovery of existing fields, then those would be new reserves, not the decline of old reserves.

Martin, the rest of your post wrt oil can basically be summed up this way: stuff changes over time. I don't disagree with that, I just don't understand why you think it's an interesting discussion. If substitutes become more economic, we'll use substitutes, if not, we'll find more oil. Ok. It's as interesting as saying we all age and eventually die. I don't understand your obsession with this topic.

I was hoping for something more specific. Are you investing in tar pits yourself at the moment?

A.) how much more specific an answer do you want to the question "where will we get more hydrocarbon?".

B.) What does my specific investment activity have to do with anything? As it happens, I'm investing in my own company and nothing else because the return I produce beats the return of anything else available to me. What are you invested in and why is that relevant?

Yes it does because the amount of oil in the ground is a function of price.

The amount of oil that people are willing to suck out of the ground is a function of price, but the amount of oil in the ground has nothing to do with price.

If oil costs more than the market price to lift, then it is not counted in reserves because it might as well not exist – even though it technically does exist.

This may be true, but accountants don't create oil. They only account for it. What you say here was true of U.S. production, and it peaked and declined as a matter of fact. At some point, global production also peaks. That oil remains in the ground at this point is irrelevant. Some oil will always remain in the ground, but we won't produce it, because alternatives will be cheaper. The economic reorganization at this point is dramatic. I'm not saying it's catastrophic. The last centry saw many similarly dramatic reorganizations.

As Ewin points out, we can squeeze hydrocarbons out of anything – including dirt in your back garden. The only question is – at what cost?

We can produce energy in many forms at a cost. We produce so much of it from oil out of ground at the moment, because pumping it out of the ground is cheaper, but this situation won't last.

Credible authorities claim that conventional production (excluding heavy oil reserves like Canadian tar sands) has already peaked. It peaked in 2005 or 2006. Price then rose, and consumption fell. Price is falling now, because consumption is falling and because threats of still tighter supply are subsiding, not because conventional production is rising.

Even if conventional production has not peaked, this prediction won't be far wrong. Wide eyed optimists say global oil production will peak before 2015. That's less than decade away, coinciding with the depletion of the payroll tax surplus, another looming event we're denying like an unsightly wart on our butt. I'm not predicting armegeddon, but it definitely portends dramatic change.

Yes we will and for the reasons I stated above, but only at ever increasing prices (unless technological advances reduce the cost of oil production by more than the effect of the demand increase).

Oil is not the limiting factor, so price will not rise indefinitely. We'll find alternatives, including increased efficiencies, less costly than the next barrel of oil we might squeeze out of the ground.

It's a hypothesis and it has plenty of detractors and with good reason.

Precisely when the peak occurs is always debatable, but Hubbert has few serious detractors since the peak of U.S. production in the seventies. That it occurs in the next decade is not controversial. The rising price and a rush to increase production may only further deplete reserves, making the decline steeper when it occurs.

Because the geological formations are different all over the world and a lot of oil is too expensive to even think about right now.

If the oil is more expensive than alternatives like nuclear, coal and wind, we'll never think about it. We don't pump oil at any price until we've pumped the last drop out of the ground. The peak isn't simply a function of supply. Rising price hastens the peak by encouraging alternatives like nuclear energy and the Volt, not to mention scooters and flourescent light bulbs. The alternatives are unimaginably vast and largely untapped while thousands of people earn their living trying to imagine more oil production at last year's price.

Who knows, if we turn to non-traditional production, the U.S. might see an increase in reserves again.

Pigs might fly, and I won't say that a peak decades in the future is impossible, but it's not what credible voices are predicting.

Deep sea, sewers, tar pits, your flower garden – for starters.

I was hoping for something more specific. Are you investing in tar pits yourself at the moment?

After reading Hans Luftner's response, I realize I could have just said "what he said"!

Martin, I'm pretty sure I still have the formula I used to use to calculate reserves on a floppy disk somewhere. I'll see if I can find and post it so that you can more easily see how reserves are a function of price.

Yes it does because the amount of oil in the ground is a function of price. If oil costs more than the market price to lift, then it is not counted in reserves because it might as well not exist – even though it technically does exist. Thus, you will see upstream operations mark up the amount of reserves they carry on their books (it's pretty much their only asset) when oil prices rise and take write offs when the price declines. As Ewin points out, we can squeeze hydrocarbons out of anything – including dirt in your back garden. The only question is – at what cost?

We'll use oil more efficiently and develop alternatives, but we won't produce more oil every year just because people want more oil.

Yes we will and for the reasons I stated above, but only at ever increasing prices (unless technological advances reduce the cost of oil production by more than the effect of the demand increase).

Which physicists from Cal Tech?

I'm terrible with names. They wrote a book about peak oil a few years ago and I thought it was B.S., so I promptly forgot their names. You wouldn't like it – it claimed an apocalyptic scenario when oil peaks because they're physicists, not economists. Their area of expertise isn't even anything to do with oil.

It's a well established theory of a peak in production following a peak in the discovery of new reserves.

It's a hypothesis and it has plenty of detractors and with good reason.

The theory successfully predicted the peak of production in the continental U.S. decades ago. The U.S. was once the world's leading producer of oil. Why is the rest of Earth's surface different?

Because the geological formations are different all over the world and a lot of oil is too expensive to even think about right now. For example, there are oil seepages in areas of the ocean where it's just too deep to economically drill a well. If oil price rises enough (or tech advancements lower costs enough), that oil will become economic and the total worldwide oil reserves will increase. Oil prices may never reach that point because alternatives will just be cheaper.

New reserves can easily be exhausted in one part of the world – especially when most of the world's easy to access oil isn't even in that part of the world. It's largely thanks to American spunk and wildcatters that American oil production ever reached the level it did. Other parts of the world were and are much more oil rich (by that I mean easily accessible oil) but much more hampered by both government idiocy and backwardness (read: Russia and Arabia). However, when the low hanging fruit is picked all over the world, we can turn to non-traditional production to extract hydrocarbon. It's much easier to predict a peak in a single location than it is to predict a worldwide peak. Who knows, if we turn to non-traditional production, the U.S. might see an increase in reserves again.

Anyone suggesting that oil production will rise for decades to come needs to tell us where to find the oil.

Deep sea, sewers, tar pits, your flower garden – for starters.