Remember the panic merchants just a few years ago warning of the dire consequences of "peak oil"? The theory was that the world's oil production had peaked and that the world economy would crash as energy costs spiralled. The CSIRO predicted that we would soon be paying $8 per litre for fuel.

At the time I was struck by the fact that known oil reserves last year equated to 30 years of projected consumption, exactly the same figure that had existed since the 1960's.

I also pointed out in blog posts and in discussions with people on Google Plus and other forums that free markets actually work to ensure that we don't have to fear the apocalyptic results of running out of energy sources. As oil becomes harder to find the price goes up (the laws of supply and demand) . But that makes other energy sources more economically viable and they come into production and so the balance returns and energy costs find a new level.

It's been happening this way since the industrial revolution. The only time that it fails is when governments intervene through rationing or subsidies.

It turns out that the United States is close to energy self-sufficiency because of this inexorable process. The price of energy has increased a little and so technological advances now make it viable to extract what is called "unconventional oil." In a couple of years, as the current oil industry investment boom starts to really turn into oil production there could be an oil glut, leading to lower prices.

Read the full article at The Energy Tribune