You Think Oil's Going Down? Think Again

Most of this developing world growth was happening in Asia, where the EIA estimates that oil consumption will grow by nearly 125% between 1995 and 2015. Anyone who has seen the streets of cities like Hanoi, Saigon, Bangkok, Phnom Penh, Shanghai and Delhi increasingly clogged with mopeds will tell you they wholeheartedly believe it.

There are reserves we could tap into, you say, but Heal points out they are only a drop in the gas tank.

The U.S. Geological Survey estimates that there are about 90 billion barrels in the controversial Alaska National Wildlife Refuge, and another 40 billion barrels or so have been found off of Brazil's coast. But global oil consumption is more than 30 billion barrels a year and growing (U.S. consumption is more than 7 billion).

"These are regarded as huge discoveries," says Heal. "But you're talking about four years worth of oil."

Additionally, he says there had been a deeply held belief among people such as himself that oil prices would top out at around $60 or $70 a barrel. The idea was that at this price it would become financially viable to turn coal into an oil equivalent or to extract oil from Canada's tar sands. So there would be new supply. But no one counted on global warming.

"Both of these processes create a lot of carbon dioxide," he notes. "No one wants to invest in them in a world where we're facing emissions caps."

All in all, "We always knew in principle that oil was exhaustible, but now it's beginning to look exhaustible," he concludes. "The more you use today, the less you have tomorrow."