Peak oil, revisited.

• Author: Bailey, Ronald
• Position: Follow-Up

In May 2006, I reported in reason that global oil reserves were ample to supply humanity's needs for liquid fuels until at least 2030, despite headline-grabbing predictions that our supply had already peaked. Afterwards, the world experienced an unprecedented run-up in oil prices topping out at $147 per barrel in July 2008, which led some negative prognosticators to get a little cocky. One of the leading doomsters, Houston investment banker Matthew Simmons, told CNBC in July 2008, "The idea that it's a bubble is all poppycock." He confidently added that the price of oil "is not going to collapse." Simmons advised Americans to move into villages and to buy locally produced foods and goods.

Following the July 2008 peak, the price of oil dropped to $33 per barrel; it has since leveled out at $60. Meanwhile, official estimates of proven oil reserves have increased slightly from 1.292 trillion barrels in 2006 to 1.342 trillion barrels in 2009.

So why are people still worried about a petroleum crunch? Two words: resource nationalism. As I noted three years ago, the sad fact is that nearly 80 percent of the world's oil reserves are in the hands of government-owned companies. Even though there are no geological or economic reasons to expect imminent peak oil, the world could easily experience "political peak oil."

Most of the government-owned oil companies are badly run, technologically backward, and being...