WikiLeaks May Have Just Confirmed That Peak Oil Is Imminent. I don’t think it delivers the relevant perspective.

I repeat what I said in my 2011 New Year article, ‘The Icebergs are coming’. Peak Oil is not going to happen now or in 2015. It happened 4 years ago. What we need to really worry about is Peak Total Oil which may happen after 2020. Peak Total Oil include oil from shale, difficult to access oil, etc. That there is no going back to cheap oil is a reasonable conclusion. What really worries me is that oil is now an asset class and investors will be tempted to push the prices up because there is so much liquidity sloshing around.

Thankfully ( …yes, thankfully), the world economy is not ready or well prepared to deal with high energy costs. Hence, as energy prices spiral, demand for energy will dip thereby pulling down oil prices. Energy costs breaching 5.5% of GDP have had that effect in the past. After all, there is head room from price discounting in conventional oil and many countries that sell conventional oil are heavily dependent on those revenues. Imagine what would have happened if in ME countries, oil revenue was only 10% of GDP! They could have turned the oil taps on or off at will without hurting themselves.