One of the most painfully optimistic consultant firms out there has to be CERA, the Cambridge Energy Research Associates. They've spent years now denying the possibility of Peak Oil, the hypothesis that global oil production faces an imminent plateau and decline.
A friend recently asked me why I maintain my acceptance of the Peak Oil hypothesis, despite the general trend in the market of optimism in new supply. Three basic reasons:
1) The market has actually been pretty bad at predicting future prices of oil for the last few years - in 2001, oil was expected to stay at it's 2001 level for a while, in 2002 it was expected to stay at its 2002 levels, etc. Today, the market seems to have internalized the current high prices, but doesn't predict prices climbing further - the exact same situation we were in in 2001, 2002, 2003, 2004, and 2005. The market was wrong.
2) The governments that issue the data the market is basing it's assumptions on are either a) notoriously corrupt and not transparent (Saudi Arabia, Kuwait) or b) even when relatively transparent, have a record of simply being wrong. The best example of B is the United States, where cabinet-level officials publicly denied that the US oil production was in a tailspin for more than a decade. More recent examples abound. At the international level, the International Energy Agency has a similar record of vastly underestimating the problems in the oil industry. How the market can make informed opinions in this environment is questionable, at least.
3) Finally, my prejudice is against economics as a science, and for geology when these two fields conflict. The main proponents of the Peak Oil hypothesis are geologists, and it's main critics are economists. (Much bad blood here.) To claim that high prices will simply bring more oil in to production is naive in the extreme. It also ignores profound short-term dislocations. To put it simply, if oil reaches $500 a barrel, we could conceivably bring all of the planet's hydrocarbons - oil, coal, gas, shale, whatever - in to production. But we'd also be paying $40/gallon for gasoline. I suppose it's possible industrial economies would continue in that sense, but I don't see it as a positive scenario.
A few years back I had an economist rather patronizingly inform me that the oil sands were an example of the massive potential for oil growth at high prices. I told him not to count his chickens, and predicted that oil growth in Alberta wouldn't bring prices down, but that the costs of tar sands oil would probably push Albertans in to the environmentalist movement. These days we see former premiers of that Province calling for a moratorium on tar sands development, and a poll showing that a Carbon Tax is more popular in Alberta than almost any other province.
John: 1, Patronizing Economist: 0.
The reason I bring this all up is because the CERA - perennial oil optimists - have released a new report, and the "peakists" at The Oil Drum have released their response. If you're new to the issue, it's relatively clear what they're talking about. If you're not new to this issue, you should be reading The Oil Drum every day anyway.
The other reason I bring it up is that I haven't written enough about energy issues lately.