CERA, the Boston energy consultancy, took another swing at peak oil on Thursday morning, announcing what it called "the missing link for understanding the future of world oil supply."

That link? Decline rates, as in how quickly do production rates in the world's oil fields slide each year. The figure is indeed key because the rate indicates how much oil needs to be found just to make up current-year declines, never mind increasing the world's total output.

Cambridge Energy Research Associates, after analyzing 811 oil fields (that account for two-thirds of global production and half of proved and probable reserves), concluded that the world's annual oil production decline rate is 4.5 per cent - about half of the 8 per cent CERA said is cited in many studies.

Basically, without getting into some math (calculating decline rates is more complicated than it might seem), a lower decline rate obviously is much better than a higher one for producers and consumers.

“Some of the more gloomy, pessimistic ‘peak oil’ views about the future of oil supplies that are current today result from an assumption of high decline rates,” Peter Jackson of CERA said in a release Thursday, adding that there has been an “information vacuum” that has led to “widely differing estimates of the potential future availability of oil.”

“This new analysis provides the basis for more confidence about the future of available oil.”

CERA, as is obvious, is not a peak oil preacher. It sees world oil production easily exceeding 100 million barrels a day within a decade, keeping up with demand and more. In terms of any peak in production, CERA envisions an “undulating plateau,” lasting decades, giving the world ample time to ease its addiction to the black gold that fuelled the 20th century (and the first decades of the 21st).

Others, however, are less sanguine and way more skeptical. Inside Energy occasionally chats by e-mail with Jim Lemon, a smart, retired geography professor who taught at the University of Toronto, with Mr. Lemon standing on the side (not necessarily dogmatically) of peak oil. In December, he sent Inside Energy the latest issue of the Peak Oil Review from the American Association for the Study of Peak Oil, pointing us particularly to the obituary of Ali Morteza Samsam Bakhtiari, cited by the review as “one of the world’s foremost experts on the subject of peak oil” who died of a heart attack last October.

Mr. Bakhtiari was a senior corporate planner for the National Iranian Oil Co. in Tehran and was especially skeptical about the Middle East’s so-called reserves, specifically of his home country Iran. Of the “Middle East Five” - that is Iran, Iraq, Kuwait, Saudi Arabia and United Arab Emirates - Mr. Bakhtiari saw only about 355 billion barrels of oil reserves, half of the advertised 710 billion or so. Only in Iraq did Mr. Bakhtiari see anything close to the widely advertised figures of what is below those deserts.

Whether he’s right is obviously unknown, but another main point - be skeptical - cannot be argued.

“It goes without saying that when assaying Middle Eastern oil reserves, one should tread carefully,” Mr. Bakhtiari wrote in a 2006 commentary. “Because, on the one hand, oil reserves' estimation is both a science and an art; and, on the other hand, seen from the point of view of most ME countries, oil reserves are more political than geological. Thus, non-scientific views come to prime over science and further enhance the various types of shades that have led to an overall opaque situation in the Middle East.”

That’s Inside Energy bolding the above key point. Underlying CERA’s analysis is a likely assumption that Middle Eastern reserves are what those countries say they are. Dan Yergin started CERA and is the author of The Prize, the Pulitzer-Prize winning history of the oil business. He is also close with top officials in Saudi Arabia - some industry players argue he’s too close - and in November received a special award for his work from the kingdom (and, it is rumoured, $100,000 in cash) when it held a summit of OPEC leaders.

Mr. Yergin is a smart man. Mr. Bakhtiari was, too. Mr. Yergin’s undulating peak is immediately more reassuring - we have lots of time to change. Mr. Bakhtiari was more anxious, seeing change forced on the world much more quickly, in four stages, the first (right about now, he argued) seeing oil production slip almost imperceptibly. Then, in the second stage, it becomes clear oil production is not rising but in fact falling. Then, worsening in stage three, a “remarkable” decline begins, with stage four featuring a harrowing “rather steep” slide (and that could occur by 2020).

Time to buy a Prius, Inside Energy advises - just in case! (Disclosure: Inside Energy, based near mountains in Calgary, drives a 2004 Subaru Forester.)
And, other possibly useful advice: Go long oil, because if production is indeed peaking - as Matthew Simmons et alia believe - it’s time to get like Mr. Simmons and bet on the price of oil rising.

Last, here’s a website of Mr. Bakhtiari’s work: http://www.sfu.ca/~asamsamb/sb.htm

PS—Just noticed on a search of Peak Oil news online that a BP PLC official put out an interesting view yesterday (one in part shared by Inside Energy--though we are, overall, standing akimbo, agonistic and curious about these issues, rather than decided).

"I believe there is a realistic possibility that world oil production will peak within the next generation as a result of peaking demand," Peter Davies, a special economic adviser to BP, said at a meeting about Peak Oil organized by British parliamentarians.