Deutsche Bank’s $150 Call: Peak Oil Light (emphasis added):

DB’s February 27th report, “100mb/d peak oil market”, was both a landmark and a disappointment. A landmark because important people pay attention to DB and because they became the first to question the conventional wisdom of range-bound oil prices. A disappointment because they pulled their punches on where they really think oil prices may go.

On Wednesday, DB had a conference call to discuss the report. The first two questioners were an Exxon Mobil (XOM) executive and a Treasury Department official. In other words, The-Powers-That-Be were paying attention. Why the fuss? Well, it was a little like the Pope saying there may not be a God after all. $150 oil by 2010.

Heresy? Not so fast. DB, not wanting to offend clients’ comfort zones, modestly suggested they were only playing with an idea, not making a prediction. A DB analyst ended the call by saying that maybe their next intellectual excursion would explore the reasons why the oil price might drop to $30.

…

Why not $125 or $250? Because $150 puts oil at 10% of U.S. GDP. Why is 10% magic, not 9% or 20%? Who knows? There was a suggestion of science to DB’s use of this number, but I suspect even they would admit it was really pretty arbitrary.

…

Actually, if you read between the lines, DB is well aware that the “scenario” does not make much sense. They freely admit that if their observation #3 above [see original article for DB’s observations] is correct (essentially it’s my hoarding thesis and what they call the “second asymmetry”), then the likelihood of production ever reaching 100 mb/d is not great. In fact, they admit that even if hoarding were not becoming the guiding economic theory of oil exporting countries the world has never produced as much oil as will be required in coming years, given their assumption of a 5% decline rate.

Among the facts they ignore is that much of the increase in liquids supply will be oil that has a very low EROI compared with the past. Thus it will require a great deal of oil to make the new oil. That includes deep off-shore fields, CTL, tar sands, and biofuels. Thus, as was recently discussed here, the increase in supply causes its own dedicated increase in demand, resulting in far less effective new supply than the simple supply numbers appear to indicate.

So in effect, this report by DB is the first gentle nudge out of the nest for mainstream thinking on peak oil. It goes so far as to suggest that $100 is by no means a price ceiling and that at some point in the foreseeable future a peak in production will be reached.

It’s not much fun to post about things I agree with completely, but this is an exception. I think the author here, Jim Kingsdale, has nailed it perfectly.

I would add, if only as a gratuitous display of egoism, that these are points I’ve hit on here so often there must be parodies of this site on the Internet based solely on how often I address them. Namely, exporting countries suddenly realizing they’d rather annoy customers and make more money by shipping less oil, and the asymptotic approach to peak oil we see in businesses, bankers, government officials, etc.

And yes, in case you’re wondering, I am more than a little annoyed that I didn’t coin the term “peak oil light” for this creeping approach to reality.