The recent unprecedented dysfunction in the oil market, has become an opportunity to remark at how wrong the concept of “Peak Oil” was. Unfortunately, the analysis of the underlying oil production dynamics are still correct. Primarily of interest is the dynamic between geology and the extraction technologies utilized. What was humorously wrong was the dominant theory of what the resulting crisis would be like. When oil rose to $140 a barrel, what did not happen was ever increasing prices until we ended up in some right-libertarian survivalist fantasy. What did happen was there was an economic recession.
The 2008 “financial” crisis justifiably brought major attention to the criminality in the global financial and real estate sectors. This criminality made the economic and social impact worse, but a false narrative that this criminality caused the crisis became accepted knowledge. The economic crisis started as a mortgage default crisis because this was simply the weakest link. With the high oil price came higher cost of transportation for people to get to work, higher prices for food and other staple products. At the end of the month when the US working poor could not pay all their bills, many chose not to pay their mortgage.
The lingering economic dysfunction since 2008, is in part a result of the failure of market dynamics to find a price that can produce enough oil and not stifle economic growth. This failure has resulted in a cycle of deflationary crises, now made worse by the dramatic drop in demand caused by the COVID-19 response. The dynamics have resulted in an observable production plateau of conventional crude oil. This not serving as a useful talking point for right-wing ideologues, spreading fear of inflation to promote austerity, does not change the geological and technological reality.
