Peak oil supply will be hit this year after the economic crisis and low prices in the first quarter of 2009 slashed much needed investment, a senior executive at Australian investment bank Macquarie said.
"This is our view -- capacity has pretty much peaked in the sense that declines equal new resources," Iain Reid, head of European oil and gas research at Macquarie, told Reuters.
The peak oil theory that oil supply is at or near its peak was long considered marginal.
It gained currency when prices zoomed towards their record of nearly $150 hit in July last year, with leading exponents suggesting various dates for the supply peak to be reached.
Some oil majors have acknowledged the prospect of dwindling production, but others have argued better extraction techniques and other technological advances will offset any decline.
Reid's latest research report -- The Big Oil Picture: We're not running out, but that doesn't mean we'll have enough -- sees global oil production capacity topping out at 89.6 million barrels per day (bpd) this year, a far more pessimistic view than most other banks or traditional forecasters.
Underinvestment in mature fields, rising resource nationalism, and the cost and difficulty of retrieving oil from discoveries in ultra-deep water could see global production capacity fall to 87.3 million bpd by 2015, according to Reid.
Reid, who spent 16 years with oil firms Shell and Amerada Hess, saw the current spare capacity cushion of around 5.2 million barrels wiped out by 2012. "With the reduction in spending on mature fields, that's the major driver. Then really it's about, 'where do the new sources come from?'," Reid said, adding the economic crisis had further restricted investment.
"If you look around the world it's either locked up in countries which are difficult to access or it's locked up in countries where they are tightening access or it's in these huge mega-structures which are very difficult to develop technically and cost-wise."
The International Energy Agency, adviser to 28 industrialised nations, has predicted global supply will continue to rise through 2015, but that demand might grow faster than that.
Macquarie saw the potential for a huge supply deficit to emerge, with global oil demand predicted to rise to 90.9 million bpd by 2015 from 84.2 million bpd today because of rising consumption from China and other emerging markets.
"Adding sufficient productive capacity on time is nearly impossible," Reid said in his report.
PRICE TO RISE, BUT NOT SO MUCH
Episodes of higher oil prices would be an obvious consequence, without either a greater political push for efficiency savings or new technological advances, he said.
But his price forecasts were still relatively conservative.
He expected the benchmark U.S. crude contract will average $84 a barrel in 2012, compared with around $71 now. The bank's "long run" forecast is for an average price of $75.
The level of nearly $150 hit last year was unlikely to be repeated, Reid said, because of its immediate damaging effect on the world economy and on fuel demand.
"One hundred dollars a barrel is perhaps liveable with in certain scenarios, but I would say gasoline will reach the $4 level again and that will naturally force more efficiency in the United States," Reid said, adding it was difficult to forecast when such levels would be hit.
Eventually, the trend could be towards peak demand, rather than peak supply as higher prices drive the quest for greater efficiency and alternative energy sources.
"(Oil near $150) would very soon create another set of global economic drivers which would spell much lower demand in the future," said Reid.
"In the very long term we can see demand for oil falling quite substantially."
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