The current fashionable theme in energy is ‘peak oil demand’ and the accompanying possible stranding of fossil fuel resources, with the resulting damage to the equity value of producing companies. This post will discuss reasons to be wary, at least of some of the arguments. A subsequent post will discuss more realistic rationales—and signposts—towards peak oil demand. Unlike the earlier ‘peak oil’ scare, which I showed in my book to be without foundation, peak oil demand is theoretically sound, in the sense that there is nothing which requires the world to continue to use ever-increasing amounts of oil. Peak oil demand theorists sometimes cite the adage “the stone age didn’t end because we ran out of stones,” which represents the aspect of resource economics that higher prices or technological advances could lead to displacement of one resource by another. Of course, the rock business remains quite robust so the […]