The "peak oil" phenomenon, which has so far received more serious treatment in the foreign press than here in the USA, is starting to break through to the mainstream--at least among the business media. On May 4, Bloomberg.com opinion columnist Matthew Lynn asks "Are You Ready to Sign Up for the $100 Oil Club?" He writes:

Last week, Matthew Simmons, an energy adviser to U.S. President George W. Bush, said at a conference in Edinburgh that oil production was close to its peak, and the price may reach $100 or more within three years, according to the Guardian newspaper. The same message was delivered in March. "Simply to sustain the oil system and start to modernize what's becoming a very old system, you are going to have to have prices up somewhere in the triple digits per barrel or you don't create enough revenue to be plowed back to make the system work," Simmons, who heads Houston- based energy investment bank Simmons & Co., told Bloomberg News. At the end of March, Goldman Sachs Group Inc. caused a stir with a prediction that oil may reach $105 in the next few years. Its previous upper limit was $80. $101 in Five Years A similarly bullish view has been pushed by Jeffrey Rubin, chief economist at Toronto-based CIBC World Markets Inc. "We calculated the market clearing price that will align future demand with supply," he said in an e-mailed response to questions. "Those prices are $61 for 2006, $70 for 2007, and ultimately $101 for 2010."

A March 21 post on the industry web site Cincy Gas Prices similarly asks "Are You Ready for $100/Barrel Crude?"

Better be, Deutsche Bank analysts & energy analysts here in the US are predicting that "burgeoning demand from China & India will drive the price of oil to well above $100 a barrel. That will put even more money in the pockets of some of the world's worst governments." I think that will put a gallon of gas over $5 here. Guess the Chinese are giving up their bicycles. Which is all really bad news for us.

But Lynn's use of the word "bullish" is instructive: as long as oil consumers are a captive market, dependent on the stuff to get to work in the morning, high prices are good news for the industry. And the current spike may have more to do with Mideast political instability, White House policy and intentional manipulation of the market than with approaching depletion of global reserves. We argued this case back in November in "Global Oil Squeeze: Deconstructing the Propaganda," WW4 REPORT #104. But hey, nobody ever listens to us!