The various reactions to a falling oil price surely reflect the different time horizons of different players. In the real world of producers and explorers, the patterns of investment in production and exploration have been repeated over and over for pretty much the full range of resource commodities. The world has survived. Of course there will be overshoots and undershoots but in the medium term supply and demand will return to their normal balance. Drama? That’s for journalists.

The fact BP is drilling 300 km offshore in the Great Australian Bight shows that the long term supply situation is parlous. I suspect many of those who attended the weekend protest rally got there in cars not bicycles, though the irony may have escaped them. Those cars would be just a few of the 1.2 bn in the world. Cars have been with us for a century burning the black gold yet we blithely assume this can go on indefinitely.

A recent article on the Euarn Mearns website suggested the 97.8 mbpd of combined liquid fuels in July 2015 may be the all time high never to be repeated. The combination of depletion and more expensive extraction must mean fuel prices will increase in relative if not absolute terms. For example petrol still under $2/L but far fewer cars on the road since underemployed people will be taking the bus. Too bad for tourism and farming both utterly reliant on cheap fuel.

I think the answer must be electric cars and synthetic fuels either powered by or made from a low carbon power source. The need should be very apparent by the 2020s.

Nice try Nick, but we've been down this road before, where you made the same (wishful thinking) predictions.

Since then and as prices slowly rose, oil production picked up as it will do again! Given many small producers are held by the financial short and curlies, and even at break even results have little other choice than to reactivate, mothballed projects in the hundreds!?
Alan B.

The elephant in the corner of this is the falling net energy of oil.

http://cassandralegacy.blogspot.it/2016/07/some-reflections-on-twilight-of-oil-age.html

We do not seem to have as much time as generally understood.

Taswegian: I think you could be onto something, and that something is likely to be hydrogen produced by the old, cheap as chips, water molecule cracking technology?

And given the product is significantly less volatile than several refinery products, at least as safe as they have been in various near city locations. Production could be sited safely in similar locations, if desirable?

This method relies on superheated steam, which automatically decomposes into its constituent parts, oxygen and hydrogen, in the presence of an appropriate catalyst. A little Co2 can be added in the flow sheet, before the catalyst to avoid creating an explosive mix, is customary and the method the ancient used also, with mixed success?

Recent advances have enabled three different lasers aimed at the same point to create subzero temperatures at the intersecting junction of the beams! This juncture could be the newly created hydrogen stream which would immediately create liquid hydrogen and a little dry ice!?

I believe the heat source could be several in line relatively easily controlled industrial microwaves that could turn a flow of demineralised water into precisely controlled superheated steam in a matter of seconds, without ever exposing the product to a naked flame? The problem for the oldies and their reliance on gas.

The energy requirement could be very large scale solar thermal, which given recent advances, successfully competes with similar sized coal fired projects, on roll out costs and as a 24/7 provider of peak demand power.

The real difference would be the solar thermal option runs on forever free fuel and could power the process from its site, thereby reducing the cost of producing endlessly sustainable hydrogen to just a few cents per litre?

As a point of interest, around a cubic litre of hydrogen gas has the same calorific value as a litre of standard unleaded petrol and is slightly less volatile. However, storage of it as a sub zero liquid presents some problems not present in highly compressed gas!

The stone age didn't end for a lack of stone!
Alan B.

Alan B, have you seen any figures on ERoEI for the process ?