$77/Barrel – Test of Peak Oil Theory?

With the Prudhoe Bay oil field shut down for weeks or months, the price of crude spiked yesterday.

Peak Oil theory suggests that as it gets harder and harder to get oil out of the ground, the oil companies will have to put more and more effort into continuing to ramp production to meet ever rising demand. Which would imply that there will be very little spare production capacity to deal with temporary interruptions like this one.

The oil production system weathered Katrina last year. It will be interesting to see how it deals with this glitch.

Just as I’m getting ready to post this, I see there’s an article in the business section of the Oregonian, suggesting that the refineries in Washington state have access to reserves of crude that might see them through this (the article does not appear to be online, probably because it was assembled from wire service reports).

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