When scientists say oil production could peak soon, the reports are met with skepticism, especially in industry. When economists talk, industry pays more attention. That makes Monday’s forecast from the International Energy Agency (IEA) significant.

Whether it’s in a year, a decade or a century, oil production will peak. Thing is, demand is rising so fast that regardless of when the peak comes, there may not be enough to go around even if more is found and pumped.

A handful of scientists have been saying for years that the peak is not just inevitable but will come sooner rather than later. Another handful disagreed. The world drove on.

Earlier this year, a Swedish researcher used a new method of estimating oil reserves and potential new discoveries to conclude that oil could peak as early as next year.

Now, the IEA, which advises 26 industrialized nations, says “oil looks extremely tight in five years time.” What exactly does tight mean? It means, in very simple supply-and-demand terms, that the sudden and rapidly growing demand (most noticeably from China and India) will soon outstrip the supply (which everyone who admits the dinosaurs are gone would agree is finite). The IEA notes the acceleration in demand, which is no secret, but it also points out that supply from mature regions is falling faster than expected.

Some will jeer at the inevitable higher prices at the pump, while others will cheer at what IEA analyst Lawrence Eagles said: “United States is very clearly coming to the point where there would be a landmark change in fuel-efficiency policies.” A middle-of-the roader might suggest we stop arguing and get cracking on some serious alternatives now.
Backgrounders: The Mysterious Origin and Supply of Oil, Top 10 Emerging Environmental Technologies, and Why Ethanol May Not be a Cure-All