It was Woody Allen who said “if you want to make God laugh, tell him your plans.” However, if that doesn’t work, then try some energy price forecasts – preferably those produced by government or industry experts.

By way of example, here’s an Economist article from 1999:

“The chairman of Royal Dutch/Shell, Mark Moody-Stuart, three months ago unveiled a five-year plan that assumed a price of $14 a barrel. He has since publicly mused about oil at $11. Sir John Browne, chief executive of BP-Amoco, is now working on a similar assumption.

“Consumers everywhere will rejoice at the prospect of cheap, plentiful oil for the foreseeable future.”

Just fifteen years ago, the oil price was about a tenth of what it is now – which even allowing for inflation is quite a difference. However, back in 1999, there were those who predicted a price trend in the opposite direction:

“We may be heading for $5…Thanks to new technology and productivity gains, you might expect the price of oil, like that of most other commodities, to fall slowly over the years. Judging by the oil market in the pre-OPEC era, a ‘normal’ market price might now be in the $5-10 range. Factor in the current slow growth of the world economy and the normal price drops to the bottom of that range.”

The laughs keep on coming:

“Last week Algeria’s energy minister declared, with only slight exaggeration, that prices might conceivably tumble ‘to $2 or $3 a barrel.’

“Nor is there much chance of prices rebounding. If they started to, Venezuela, which breaks even at $7 a barrel, would expand production; at $10, the Gulf of Mexico would join in; at $11, the North Sea, and so on.

“All this explains why oil prices will remain low.”

As we know from our vantage point in the present, oil prices did not remain low. The first decade of the 21st century saw them rocket upwards to a 2008 peak of $147 a barrel. They then crashed with the world economy, before staging a recovery that has yet to be matched by many other commodities.

It has become fashionable to mock the pessimists who saw the events of the last decade as evidence of peak oil, but while the Jeremiahs overstated their case, what the Economist article shows is that the Pollyannas got it wrong too.

The undeniable fact is that the most readily extractable oil is running out fast. If that weren’t the case, then the price of Brent crude wouldn’t be hovering around $100 a barrel in the wake of the worst recession in living memory.

Nor would the industry be bothering to look for oil in dangerous and difficult areas like the Arctic if there was enough of the stuff coming from more easily accessible fields.

According to Ambrose Evans-Pritchard of the Telegraph, the cracks are beginning to show:

“The US Energy Information Administration (EIA) said a review of 127 companies across the globe found that they had increased net debt by $106bn in the year to March, in order to cover the surging costs of machinery and exploration, while still paying generous dividends at the same time. They also sold off a net $73bn of assets.

“This is a major departure from historical trends. Such a shortfall typically happens only in or just after recessions. For it to occur five years into an economic expansion points to a deep structural malaise.”

How long this can go on for is anyone’s guess – but anyone who tries had better have a taste for humble pie.