Canada's most right-wing major newspaper gets Peak Oil

This oil squeeze may be permanent

Whether it is rising cost of the commute to work or operating a second car for the family, Canadians are justifiably stressed out by the sky-high price of oil. We are all nervously wondering if current prices are a once-in-a-generation spike, or if $1.20-per-litre gas will seem like a bargain a year from now.

There is a mounting body of evidence suggesting that global demand for oil is fast outstripping supply. For starters, global oil production has stagnated in recent years at approximately 87 million barrels per day. This is as much the result of the declining output by some of the world's largest oil fields (e.g., onetime oil exporters such as Mexico are now importing gas) as it is a reflection of the difficulty of finding new oil reserves: In the last 15 years, despite oil companies spending billions on exploration, only one new oil field with the potential to produce half a million barrels a day has been found.

The large untapped reserves that have been discovered in recent years -- such as last summer's big strike off the coast of Brazil -- must be extracted from thousands of metres below the sea floor or by refining hundreds of millions of tons of oil sands. All such new oil reserves can be exploited profitably only at current, and in many cases higher, per-barrel prices.

Compounding the global supply problem is the petro-nationalism of the major oil-producing nations such as Iran, Venezuela, Russia and Indonesia. These and other governments of big oil exporters are subsidizing the cost of petroleum for their citizens and domestic industries to strengthen their hold on power. As the populations of these countries continue to grow, so will their domestic energy demand. The result: Less and less oil will end up on world markets.