However, too many people make the mistake of believing there is an endless oil supply.

I know these people aren't thinking that we have an infinite amount of oil underground — thankfully, I haven't met anyone gullible enough to believe that.

At least not yet.

So you can imagine my intrigue when an extremely optimistic reader touted the idea, as he put it, that the world has "an endless supply of oil."

And when he casually made this statement, I couldn't help but prod him for an explanation.

He was under the impression that no matter how far demand jumped, technology would always come up with an answer.

It's optimism that I simply can't share.

Can you?

I'm curious as to how many of you would actually put faith in technology's ability to keep pace with future demand increases.

Granted, demand has yet to recover from last year's decline. . . but things are looking tighter for the next few years.

The IEA recently revised their forecast for global demand, which they expect to average 84.4 million barrels per day this year and 85.7 million barrels per day next year. If you're keeping track, that's nearly a half-million-barrels-per-day increase over previous estimates.  

Drilling to the Ends of the Earth

One of the first things I wanted to convey to readers when I arrived in Baltimore a few years back was how far companies have to go to pump today's precious crude oil. My outlook hasn't changed in the slightest — even after the economy hit the fan last year.

Let's take a look at the three most recent oil discoveries that come immediately to mind.

The first is the latest oil field discovery in California. Most of you already know how underwhelming I found the Kern County oil flop. It's underwhelming in the sense that the 250 million barrels of oil equivalent satisfies a little more than a few weeks of our oil demand.

(And remember. . . that's assuming some magical wand is waved, allowing Occidental to produce all of it at once.  Also, keep in mind that two-thirds of the discovery is natural gas.)

My optimistic reader made a point to mention BP's discovery at the Tiber prospect. What he didn't realize was that he was further proving my point in doing so. The three billion barrels of oil was only reached after drilling deeper than any other rig has ever drilled before in the oil and gas industry. Drilling 35,000 ft. is certainly not an easy task.