The key to understanding probable future oil availability is the identification of valid indicators while rejecting those that are invalid.
Price at the pump, for example, is not a valid indicator. Relative inelasticity of excess refining capacity of heavy/sour oil coupled with upswings in economic growth and non-commercial (funds)holding long contracts and futures have contributed to a short term rise in prices. As national economic systems of the world work through their economic cycles this, and improvements in inventory management, are likely to ease shortages and prices.
Reports of changes in (oil) field extraction rates and reserve capacities are additional invalid indicators. The primary producing fields are not open to independent audit. OPEC members have a long-standing history of changing reserve calculations to suit short-term political and economic objectives.
Increases in funding of alternative fuels research is another invalid indicator. That doesn't mean such funding is a bad idea. It just tells me that such funding could very well be a combination of ideas ranging from, at best, "planning for an energy safety net" or "means to increase domestic free cash flow" to, at worst, political pandering to interest groups.
Another indicator I dismissed as invalid is various automobile manufacturers' development and marketing of more fuel efficient vehicles. This has more to do with applicability of certain business intelligence systems, marketing projections, consumer perceptions of "the oil crisis", operating margins on particular lines of vehicles, competition in various segments, etc. and less to do with future oil availability. Less, however, is not nothing. Should oil become significantly more expensive in the next few years (I don't belive this will happen) certain auto makers, having developed and marketed lines of more fuel efficient vehicles (at a relative lower operating margin) will be well positioned in the marketplace relative to auto makers that didn't "hedge" their marketing and stuck with less fuel efficient higher OM lines.
Having dismissed some of the more popular rationales for embracing the likelihood of future scarce oil I'll share what I believe is a very strong valid indicator.
When major oil companies spend the first cost megadollars (tens of billions) needed to extract oil from shale and sand this tells me three things: first, well oil is becoming more and more difficult to find, second, this trend, of increasing difficulty in finding new well oil, has been happening for some time, and third, lots of money has already been spent on exhaustive state-of-the-art exploration (because even though expensive these costs pale in comparison to the committment needed for shale/sand extraction first costs).
First costs (Utah) for shale extraction have been estimated at $12 per barrel. That is six times Saudi extraction costs. The oil, by the way, has excellent specifications. For example, it is actually superior to JP-4 (jet fuel) than the world's best well oil because it has a lower freezing temperature. Reserve estimates for U.S. shale top one trillion barrels. As good as it is, however, no oil company in their right mind is going to invest the tens of billions of dollars it will take to initiate major production without very solid reasons.
When the oil company megabucks start to flow for oil shale/sand recovery....take notice. Detailed shale/sand extraction contingency plans are now being fined tuned. If the shoe drops, and serious development monies start to flow (even as economies slow, oil prices drop and inventories build) then better stay tuned.
