The Guardian, Today Online 5 Jan 08;
The rise and rise of oil prices is renewing interest in the "peak oil" theories which originated in 1956 when geologist M King Hubbert predicted that United States oil production would peak in about 1970, which it did.
While demand has risen sharply in recent years because of the strongest performance of the world economy for decades, oil supply has increased far more slowly, leading to the price we have today.
Some of the price rise has been blamed on speculation, some on the decline of the US dollar, in which oil is priced, but most analysts agree that this oil price shock is demand-led rather than being the result of an interruption to supply, as in 1974 and 1979.
The peak oil theorists argue that production has not increased in line with demand simply because it cannot. Oil reserves are finite. Many of the world's biggest fields are already suffering declining output, and that could accelerate, they argue.
One leading proponent of the theory, the German-based Energy Watch Group, recently argued that global oil output peaked in 2006 and will halve by 2030, rather than rise from the current 85 million barrels per day to 120 million, as conventional projections suggest.
Oil prices hovered between US$10 and US$20 a barrel for many of the 15 years to 1999, then began an upward march that has culminated in the US$100 now being tested.
While conventional wisdom has been that rising prices would bring big rises in production, this has barely happened.
The producers' cartel, the Organisation of Petroleum Exporting Countries, increased its output by 3 million barrels per day in the early years of this decade but it has not risen since.
Peak oil theorists point to the United Kingdom, where oil production peaked in 1999, at 3.2 million barrels per day but has halved in just eight years. Once oil production peaks, they say, it does not stay steady for decades, it falls quite rapidly.
The current price is a real incentive for producers to pump more oil. The next two or three years will tell us whether global production has peaked.
Maverick trader pushed oil to US$100 level
Straits Times 5 Jan 08;
LONDON - IT WAS a small deal, but with it, a maverick trader pushed oil to US$100 (S$143) a barrel for the first time - and also secured a place for himself in history.
According to the Financial Times, insiders have named the trader who sought the proverbial 15 minutes of fame as Richard Arens, who runs a brokerage called ABS.
The cost to Mr Arens for bragging rights - or, as one oil market newsletter editor put it: 'To tell his grandchildren that he was the first in the world to buy US$100 oil' - was US$600.
He bought 1,000 barrels, the smallest amount permitted, for US$100 on Wednesday, at a time when the prevailing price was $99.53. He sold it immediately for $99.40 at a $600 loss.
Market watchers believe Mr Arens was motivated simply by being the first person to buy at US$100.
His actions have attracted criticism from experts, who say that it risked artificially triggering automatic 'stop orders' placed by others in the event that the price hit US$100, reported Britain's Guardian newspaper.
Mr Arens, who placed the deal on the floor of the New York Mercantile Exchange (Nymex), was not available for comment.
Analysts say he may have been testing the ceiling of the crude price, but the premium he paid surprised the market.
Nymex said that US crude oil futures traded just once in triple figures on Wednesday.
Mr Stephen Schork, the oil market newsletter editor, told BBC Radio Four's Today programme: 'This could have triggered a massive artificial rally. It creates a doubt that these kind of shenanigans could be commonplace - you begin to question the validity of prices and to ask 'are these markets really working?''
Meanwhile, the transaction was not shown at first on the electronic Globex system, which carries the bulk of crude oil trading, leaving the market unsure about the price level. But Nymex told the Financial Times that 'it is considered a valid trade'.
Yesterday, New York's main contract, light sweet crude oil for delivery in February, was 11 cents higher, at $99.29 a barrel.
