Conventional oil production peaked in 2005. That was the year ordinary oil (land and offshore) wells produced their peak quantity of crude oil and condensates.

Conventional oil production peaked in 2005. That was the year ordinary oil (land and offshore) wells produced their peak quantity of crude oil and condensates. Tar sands, deep water, synthetic fuels, coal and gas conversion, and hydraulically fractured wells have produced a few percent more lately than the plateau of total production from 2005-2011. Those methods start paying at US$70-100 a barrel. The plateau saw prices above US$100 consistently. Demand made itself more efficient in the face of rising prices even as new expensive sources came online. Now the new sources are producing but demand has softened enough with basic efficiency measures that the new unconventional oil cannot command the high prices. Unless things change fast, we'll see the worst of all possible effects. New oil ventures will fail and go offline. Low prices will lead to efficiency plans being cancelled. We'll have the situation of five years ago again and prices will skyrocket as demand rises and the new unconventional oil is offline. Of course, that's exactly what OPEC and Russia are hoping for. They want new oil sources and efficiencies to go away so they can get back on the gravy train. So they're flooding the market strategically now to drive prices even lower and put new sources out of business. Since it takes investors and technologies several years to react to changes in price, a fairly steady production could lead to accelerating resonant gyration in prices if OPEC can time it right. It's all very exciting, but it doesn't change the reality that oil is getting harder and harder to extract. Eventually it will be too expensive to extract more.