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Taking a peek at peak oil.

One of the most controversial ideas within the world of energy is called peak oil, which in simple terms looks at the rate of change in demand and supply of crude oil. Essentially, the peak oil theory holds that at a certain point the output of the world’s oil producers will hit its maximum, and from there the supply of oil will begin to decline, even as the demand rises.

If peak-oil advocates are right, the world has already reached a point where the growth in demand for black gold from emerging markets exceeds the combined increase in new supplies. In other words, the planet is starting to run out of oil reserves.

The optimism that falling supply accompanied by rising demand will cause the value of oil shares to skyrocket isn’t going to make a huge difference in the short term, but it may underpin an increasing demand for large, strategically valuable oil reserves.

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