The interesting part of this story, however, is not that the EIA has started to back off from the very high production projections (and therefore low prices) they have been making. It is the rationale for doing so that is of note.
First we can dismiss the idea that peak oil will have anything to do with the major reduction in the projected world production 20-25 years from now. The Associated Press quotes the EIA Administrator as saying “the oil is there” when asked about suggestions that perhaps world oil production was peaking. To drive home the point, one of the Administrator’s press conference PowerPoints boldly asserts that the reassessment of long-term prices is “Not due to ‘Peak Oil’ considerations”. So there!
It seems the EIA reassessment, however, is based on the realization that the OPEC nations simply are not going to make the massive investments necessary to increase oil production by the amount the EIA had been projecting. There is also the notion the major oil producers are making so much money from increasing prices they don’t really need to increase production to keep making more and more…
All in all the EIA projects a rosy future for energy supplies. Natural gas will come from greatly increased imports of LNG and prices will drop to a reasonable $4-5 per thousand cubic feet, and peak usage won’t occur until 2025.
It sounds great unless of course, it is a house of cards. The same PowerPoint bullet that asserts that the EIA’s reassessment is “not due to ‘Peak Oil’ considerations” goes on to say, “we are following this issue closely.”