@Anjo
Realistically as the world population continues to expand demand will easily outstrip any new finds. I think perhaps we are the peak of new easy oil finds as per Pragmatic’s comment.

@Pragmatic
Yes I’ve considered as few problem areas with my projection. High inflation and a recession is fairly evil to my plans. Yet at the same time I’ve considered the fact I’m likely going to be doing something in retirement that will earn some money (which isn’t included in the plan). Additionally I’m planning as one of my first projects a small ecohouse to live in which should be designed to reduce my energy dependence fairly significantly. I’m researching my ideas now to determine which technologies to use. I’ve even thinking about skipping natural gas entirely.

@ Cash Canuck,

Excellent point. Air travel will become much more expensive again. My travel plans might drop back to one long trip to Europe where I spend like 6 months overseas.

Tim

Improving extraction techniques (oil sands) and new deposits (methane hydrates?) made economical by high prices should keep the supply at a reasonable level. If supply drops and those processes/deposits become un-economical, producers will cease operations until demand necessitates a re-opening.

Running out of oil? Not for centuries, but we will have to change the way we live and make choices with the cost of energy in mind. Frankly, I find the idea of the world consuming less oil refreshing. Bring on $4 gas!

Oil itself will be around for another century or two, but as our production capacity/supply diminishes and we switch to more and more expensive forms of oil extraction, the price will become so high that our use of oil as we know it today will cease. It will become a precious resource reserved only for those activities that can make its high cost burden economical.

It remains to be seen whether we can develop another energy technology that is as cheap as oil, but I doubt another feasible replacement exists that has the broad versatility that oil has. Instead, multiple forms of energy generation will co-exist, feeding specific functions which are best suited for it… and these are likely to be much more expensive on a per joule basis than oil is.

Unfortunately, human beings have demonstrated repeatedly over history that even when they know something is doomed to occur, they don’t make a change to their habits until it’s too late. And so it will happen with oil: prices will drop a bit and we’ll get used to $1.30 gasoline and then when peak oil truly does hit and we start running short of oil as a society and the price goes sky high (how does $4/litre gas sound?)… only then will we cry for change and wonder why our politicians didn’t have the foresight to save us from this doom.

I happen to be one of the folks who believe that we have already hit peak. Or, at least peak for the cheap light sweet crude. Since coming upon the peak oil theory about five years ago, I have read as much as I could on the topic and the arguements and data is very believable.

Even without the emerging developing economies, our current supply of oil is very tight. Sure, we may be able to find new sources of energy – wind, solar, geothermal, nuclear. but that will only be a result of oil getting more and more expensive. It will get more espensive because the supply out there is not increasing. Sure many will start telling you about untapped resources – Petrobras’ new find, or the Jack discover in the GoM, or the potential for drilling ANWR, etc. The fact is that these finds won’t replace the annual consumption that we are using right now, and in the case of offshore, deepwater drilling…they are very expensive. it’s not like the 10 dollar cost the Saudis need to recover oil…deep water drilling I’ve read can cost anywhere from 60 to 100 bucks a barrel to extract.

I could go on, but there is so much information on the topic, you can do some simple research for yourself and decide.

I am reminded of a report Jeff Rubin put out last month. The one line I remember distinctly was that “Globalization is reversible”. As energy gets more expensive, we will have to relocalize our economies. It means that compentitive advantages of cheap labour get washed away when the cost to transport the raw materials and the goods back to you are prohibitive. It means that everything will start to become more expensive.

I have often wondered if your ‘retirement’ at 45 with a semifixed projected income was going to be realistic in an inflationary world. I hope you have done some sensitivity analysis with inflation and rising cost of goods and services.

Possibly we are at the end of finding really easily accessible oil that comes out of the ground when you stick a straw in it . . . but we’re not running out of oil any time soon.

There has to be a peak at some point, right? Oil is obviously a nonrenewable resource in the sense that “making” new oil would take several million years. Is the peak here yet? I think it’s probable. At the very least, I’m personally planning on gas prices continuing to increase until we’re paying at least as much as other developed countries in Europe and Asia do. Won’t make much difference in my investments as I don’t pick stocks but does make a difference in budget choices like planning travel carefully.