By Philippe Cahen, Forecaster

 

Who's still talking about peak oil?


© Elipso 2017
Philippe Cahen

Weak signals are the conclusions of information or signs that inspire thought. One example is the price of oil. From 2005 to 2007 it fluctuated between $50 and $75 (London Brent crude per barrel). From the end of 2007 it rose steadily, reaching a high of $150 in July 2008. Every day we heard about "the Hubbert peak" or "peak oil": the tipping point when we reach the maximum rate of oil extraction and start slipping towards its end. The peak was supposed to be around 2020. This picture led some analysts to forecast a barrel at à $300 as $200 would soon be reached. The entire economy was viewed under this scenario. At the same time, food prices soared from base 100 (1998-2000) to 300 (dairy produce and cereals) in late 2007, early 2008. In December 2008, a barrel of Brent cost just $32.40.


The weak signals approach avoids uniform thinking. As the price of crude is rising, let's imagine it at $300 or even $400 per barrel. And let's imagine it falling to $50. Let's suggest a hypothesis and its opposite. There'll be objective arguments both ways. Crude oil is currently around $100/110. In November 2014, it's dropping below $80$. On one hand, global growth is relatively weak, inventories are high, environmental pressure is driving demand for alternative energies, and on the other hand shale oil, a recent development on the market, is being extracted in large quantities. Has anyone mentioned peak oil since 2010? No! The world is brimming with carbon energies that were supposed to run out. However, a barrel below $90 threatens several economies, including Russia, the Arabian peninsula (Saudi Arabia, Qatar, etc.) and Algeria. And below $70, US shale oil is no longer profitable.

 

The same information carries different weak signals that are all accurate. Working on opposing hypotheses isn't easy under the prevailing uniform thought. Let's do it anyway. Spotting weak signals means capturing information and changing our view of it. Every view will be backed up by sourced, justified information.

 

 


 

 

Since 1995 Philippe Cahen has worked with businesses and organisations to imagine their futures. His original, flexible and economical forecasting approach is based on weak signals and dynamic scenarios. His monthly newsletter La Lettre des Signaux Faibles, created in 2003, has 8,000 subscribers.


A speaker and educator, he makes regular media appearances.


More information: www.signaux-faibles.fr