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The change is so stark that the oil industry itself has lost some of its cockiness. Last fall, after the International Energy Agency released a forecast showing global oil demand rising more than a third by 2030, to 116 million barrels a day, several oil-company executives voiced doubts that production could ever keep pace. Speaking to an industry conference in London, Christophe de Margerie, head of the French oil giant Total, flatly declared that the "optimistic case" for maximum daily output was 100 million barrels—meaning global demand could outstrip supply before 2020. And in January, Royal Dutch Shell's CEO, Jeroen van der Veer, estimated that "after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand."

To be sure, veteran oilmen like de Margerie and van der Veer don't talk about peak oil in a geologic sense. In their view, political and economic factors above ground, rather than geologic ones below, are the main obstacles to raising output. War-torn Iraq is said to have huge underground oil reserves, yet because of poor security, it produces about a fifth as much as Saudi Arabia does. And in countries such as Venezuela and Russia, foreign oil companies face restrictive laws that hamper their ability to develop new wells and other infrastructure. "The issue over the medium term is not whether there is oil to be produced," says Edward Morse, a former State Department oil expert who now analyzes markets for Lehman Brothers, "but rather how to overcome political obstacles to production."

Yet even oil optimists concede that physical limits are beginning to loom. Consider the issue of discovery rates. Oil can't be pumped from the ground until it has been found, and yet the volume discovered each year has steadily fallen since the early 1960s—despite dazzling technological advances, including computer-assisted seismic imaging that allows companies to "see" oil deep below the Earth's surface. One reason for the decline is simple mathematics: Most of the big, easily located fields—the so-called "elephants"—were discovered decades ago, and the remaining fields tend to be small. Not only are they harder to find than big fields, but they must also be found in greater numbers to produce as much oil. Last November, for example, oil executives were ecstatic over the discovery off the Brazilian coast of a field called Tupi, thought to be the biggest find in seven years. And yet with as much as eight billion barrels, Tupi is about a fifteenth the size of Saudi Arabia's legendary Ghawar, which held about 120 billion barrels at its discovery in 1948.

Smaller fields also cost more to operate than larger ones do. "The world has zillions of little fields," says Matt Simmons, a Houston investment banker who has studied the oil discovery trend. "But the problem is, you need a zillion oil rigs to get at them all." This cost disparity is one reason the industry prefers to rely on large fields—and why they supply more than a third of our daily output. Unfortunately, because most of the biggest finds were made decades ago, much of our oil is coming from mature fields that are now approaching their peaks, or are even in decline; output is plummeting in once prolific regions such as the North Sea and Alaska's North Slope.

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