09/22/2011 07:01 am ET Updated Nov 22, 2011

EXTRA! EXTRA! Wall Street Journal and New York Times Finally Catch Up, Report "Peak Oil" Theory Is Bogus

A Front page article in Tuesday's New York Times, "New Fields May Propel Americas to The Top of Oil Companies' List," brays about the massive rush to develop oil in the Western Hemisphere from Brazil to Colombia, to Argentina, offshore Cuba, the oil sands of Canada, the shale deposits of North Dakota as well as the deposits of Venezuela now estimated to be comparable to those in Saudi Arabia, and those of Mexico, the latter two held in check by resource nationalism. Add to that the major new additional discoveries off the coast of Brazil and French Guiana. In other words, an amplitude of oil comparable in its potential and possibly surpassing that of the Mideast that will make the Americas no longer dependent on the whims of the OPEC cartel and its ilk.

Then the Wall Street Journal, not to be outdone, weighed in in its weekend edition with a banner full page article, crafted by Daniel Yergin, "There Will Be Oil," citing the fallacies in M. King Hubbert's "Hubbert's Peak Theory", the oft cited rationale for "peak oil", "fueling anxieties about the stability of global energy supplies... stoked by rising prices and growing demand." The article goes on to detail that with new and extensive resource plays and significant technological developments the total stock of world oil keeps growing dramatically and that Hubert's Peak is nowhere in sight.

News? And a break from inculcated presumptions and received wisdom? Well yes, but not if you have been following my column. Five years ago this corner on the Huffington Post published "Oil is Not Scarce - The Oil Industry Continues to Play Us For Fools " (May 24, 2006). The post made the following observation:

Oil, and permit me to underline this, is not scarce. That is one of the most important facts in the world, and hardly anyone you meet will believe it. Most people have been bamboozled by the oil industry led by its flacks, by compliant analysts, by peak oil spinmeisters, a snoozing press and the heavy artillery brought to bear by the Organization of Petroleum Exporting Countries (OPEC), which works overtime and spends big to make us believe in the myth of scarcity. That process keeps prices high and oilmen rich, while the rest of us pay and pay and pay.

This was followed up a year later with "Peak Oil is Snake Oil!" (June 25, 2007), among other observations, adding the following comments to the brew:

With recent discoveries of massive oil and gas finds off China's northeastern coast, the Gulf of Thailand, the U.S. and Mexican coasts of the Gulf of Mexico, Sakhalin Island, the West Coast of Africa... In this writers opinion the "peak oil" prankster's zeal is closer to theology than to theory. They are aided by the oil companies that run TV ads advising us that half the planet's oil will be consumed in 20 years or such as the very recently released study from BP cautioning us that available oil will be consumed in 40 years time. All permitting oil interests to tweet 'peak, peak, peak' while stampeding us to ever higher prices.

But times are a changing. With "peak oil" finally in proper perspective the hegemony of OPEC over the oil market is starting to sunder. The ascendancy of oil production in many corners of the world is beginning to change the accepted rules of the market. As the New York Times has pointed out, the Western Hemisphere is coming to the fore. What needs be pointed out is that its impact on the oil marketplace is already significant.

In the world today there are two key oil price benchmarks, Brent Crude traded primarily in London and West Texas Intermediate (WTI) traded primarily in New York. While OPEC held sway, both benchmark prices moved almost penny to penny or farthing to farthing in tandem. Over the last year or so, responding in large measure to growing availability of domestic crude, especially in North America, the price for WTI today is some $25 per barrel less than the quoted price for Brent crude ($108/bbl vs $83/bbl).

Clearly the disparity is giving OPEC great concern. Earlier just this week OPEC Secretary-General Abdalla El-Badri, speaking to reporters in Dubai would plaintively comment on the widening gap between WTI and Brent.

In the past, the reference was WTI, and now it is the reverse. Whoever uses WTI as a reference crude, yes they have problems. They used to be close together, but now the gap has widened, so that the comparison does not mean anything. This is the concern of everybody... Even Brent is a problem because the quantity is getting less and less.

"The quantity is getting less and less." Well, finally the scales have fallen from our communal eyes. No Mr. El-Badri, it is not the quantity that "is getting less and less". What will be getting "less and less" is the price you will be able to extract from your once gullible consumers throughout the world.