Yes yes exactly right yes

The Globe and Mail's Barrie McKenna makes me happy first thing in the morning:

The flavour of the month is to dump on the peak oil thesis -- that world oil production has maxed out and is condemned to fall.... In the past few weeks, as the price of oil has plunged more than 20 per cent from July's record high of more than $78 (U.S.) a barrel, economists have begun to second-guess and even joke about what last year was considered sound analysis.

On Friday, BMO Nesbitt Burns issued a report about the implications of cheaper oil titled Trough Oil Theory. After Chevron announced its recent big Jack 2 oil discovery in the Gulf of Mexico, The Globe and Mail's headline the next day was: "Peak oil theorists don't know Jack."....

The problem in all this is that the peak oil theory isn't about $78-a-barrel oil. And the price of abundance isn't necessarily $63.

The factors that pulled oil futures prices from $78 to $63 are short-term realities in a very long cycle. The forecasted hurricanes never came. Chevron hit pay dirt. Iranian President Mahmoud Ahmadinejad was suddenly sounding less like Dr. Strangelove on his nuclear intentions. Members of the Organization of the Petroleum Exporting Countries met in Vienna and said they won't lower production quotas....

Long-term futures prices of oil remain significantly higher. Futures prices for most of 2007 and 2008 suggest crude will stay near $70 a barrel.

And don't forget that even at $63, oil is twice as expensive as it was last year when the OPEC cartel raised its production to current levels. It's also twice as pricey as it was just three years ago.

The idea of stock brokers and oil speculators all having a party because oil is only at $63 is ridiculous. Not three years ago, $30 was considered dangerously high and destabilizing for the world market. It turns out the world market can adapt, and the $30 number was really just self-serving BS on the part of western industry and governments.

The long-term trends haven't changed: net negative discovery rates, shrinking production growth, accelerating demand growth. All those factors together spell P-E-A-K-O-I-L.